John P. Nolan ’19
This paper provides evidence for how cultural values surrounding the perceived degree of freedom in life influence real outcomes in the market. I proxy the perception of control in life as being the perceived returns to effort and other inputs. I first demonstrate significant between-country differences in the cultural belief surrounding one’s perception of control and freedom in life. Controlling for a great deal of covariates, I then use global panel data from two waves of the World Values Survey to demonstrate a strong relationship between the perception by an individual of her control over her life, and her outcomes in the labor market. These results in the global panel are robust to controlling for a variety of individual-level characteristics as well as time-fixed effects.
In a panel of second-generation immigrants from the United States, I give evidence for cultural transmission of perceptions of personal life control affecting educational outcomes in the same manner as the global panel. I then demonstrate that the vertical transmission of this cultural value has persisting influence on outcomes for offspring in the markets for both labor and private health insurance. Results from the United States panel are robust to controlling for individual-level characteristics, as well as effects fixed for both time and geography, by county.
There is a large and growing literature in economics studying the real returns in the market to the treatment of schooling. However, Jensen (2010) contends that it is not real returns that influence schooling decisions, but rather perceived returns. In his work, he demonstrates using a survey of eighth grade boys in the Dominican Republic that the perceived returns to attending secondary school are quite low, while its actual returns in the market are quite high (Jensen, QJE 2010). Over 80% of youth in the Dominican Republic complete primary school, while under 30% complete secondary school. This gap persists despite the fact in the Dominican Republic that workers completing secondary school earn on average 40% more than workers completing only primary school.
Further, his paper shows the significance of this information gap between actual and perceived returns to schooling. Randomly selected Dominican Republic schools where children were given information about the actual returns to attending secondary school observed their students receive on average between an additional 0.20 and 0.35 years of schooling over the next four years, compared to schools not receiving a shrinkage of the information gap between perceived and actual returns (Jensen, QJE 2010).
But how does this information gap persist? Agents may pass to their descendants a cultural package of expectations about their perceived returns to many elements of life. This could occur through explicitly expressed views, or by example from the agent’s demonstrated preferences in life choices surrounding education, work, and lifestyle, and these demonstrated preferences are then passed to offspring. I provide evidence for the role of culturally distinct values surrounding the perceived returns to effort and input, proxied by one’s perception of life control, in determining an individual’s real outcomes in educational attainment as well as the markets for labor and private health insurance. My thinking for this proxy is that the perceived returns to an action exist in the degree to which an individual believes that factors beyond the action in question influence his or her subsequent life outcomes. The weighting of these other factors that are not the action in question are represented in the perception of life control. My conjecture for this specific empirical pathway between perceived life control and perceived returns to effort is rudimentary and requires more research, but I do believe the intuitive connection holds generally.
This paper demonstrates that mean levels of the individual perception of personal life control are different between nations at a highly significant level. Subsequently, in a global panel I demonstrate the role that personal perception of life control plays in determining outcomes for educational attainment, controlling for individual-level characteristics as well as geography and an interaction of geography and gender. Finally, in a panel of second generation immigrants in the United States, I give evidence for the persistence of these effects of perceived life control in determining real outcomes for offspring in educational attainment as well as the markets for labor and private health insurance.
In these relationships, when approaching the highest levels of perceived personal life control, the inclusion of quadratic terms in my regressions gives strong evidence for an inverted U-curve relationship between perceived life control and the outcomes in question. This means that levels of perceived personal life control that are both relatively high and relatively low can exhibit lower perceived returns. Lower levels of perceived returns observed at relatively higher levels of perceived personal life control perhaps occur from naïveté in agents, where excessively high perceptions of personal control in determining one’s life outcomes make an individual naive or arrogant about the role of relevant factors that are not the agent herself.
In the global panel, individuals who perceive less control over their lives and fewer returns to the input of effort are less likely to complete secondary school and college. These results are robust to numerous individual-level controls and fixed effects for geography. In the United States panel, second generation immigrants whose paternal cultures perceive fewer returns to effort, as proxied by the mean level in the father’s home country, are actually more likely to complete high school, college, and graduate school. Further, second generation immigrants with this cultural heritage exhibiting lower perception of life control are actually more likely to be in the labor force, but those who are have lower total income. Additionally, when controlling for income, lower mean perception of life control in the home country of the father predicts that an individual is more likely to have private health insurance. This may result from risk aversion in the face of greater uncertainty. Though the real returns in the market are nevertheless an incredibly significant issue of economic study, policymakers should consider the implications of perceived personal life control and perceived returns to better understand how individuals make economic decisions, and these insights might more efficiently shape economic policy.
I combine data from waves three and four of the World Value Survey, exploiting the inclusion of the same question in both administrations of the survey. I also make use of the distinctions between them in the specific nations surveyed, allowing for a larger and more balanced global panel. The specific language of the question of interest asserts that “[s]ome people feel they have completely free choice and control over their lives, while other people feel that what they do has no real effect on what happens to them.” The respondent is then asked to respond with an indexed value from one to ten, with a reported value of ten being associated with perceiving “a great deal of freedom,” and a reported value of one being associated with perceiving “none at all.” Respondents are instructed to use the index “to indicate how much freedom of choice and control you feel you have over the way your life turns out.”
I proxy an individual’s response to this index of perceived personal life control to represent perceived returns to one’s effort and other inputs in life. Between two individuals, a relatively lower value of perceived life control indicates that a person believes his or her actions and decisions matter relatively less in determining life outcomes. Mean levels of individual perception of freedom between nations are different to a high degree of significance. Tables 1, 2, and 3 demonstrate that highly significant differences in national mean levels of perceived freedom exist even between bordering countries.
Data on individual educational outcomes and controls are from the WVS. To study cultural transmission and its effects, I use data from years 1995-2015 of the March Supplement of the Current Population Survey, exploiting its inclusion of immigrant status and paternal nativity. The CPS has rich data on individual income and labor force status, as well as health indicators and many other controls.
III. Empirical Strategy
For the global panel data, I perform three sets of regressions: one respectively for each of waves 3 and 4 of the World Value Survey, and another set performed on the combination of the two waves. In all models for the global panel, I regress two respective educational outcomes of attending secondary school and attending college on an individual’s response to the index of perceived life control, as well as the squared value of that index response. I include individual-level controls for age, age-squared, and being female. For all three global panel sets, in the secondary regression on attending college I include an indicator for attending secondary school to help control for unobserved, confounding factors that might influence one’s probability of receiving any higher education whatsoever.
I include country-fixed effects. Standard errors are clustered by country. As the experience of growing up and living in respective countries is likely not homogenous between genders, I include controls for not only country-fixed effects, but also an interaction between country-fixed effects and a dummy variable set to one if the individual is female. This allows differential country-fixed effects between males and females. The intuition behind this seems solid, in that being a woman in Pakistan likely has different effects on life outcomes than being a Pakistani man. Alternatively, this may be understood as geographic conditioning of gender fixed effects, rather than gender-based conditioning of geographic fixed effects.
Religiosity and spirituality may be related to both educational attainment and one’s perception of control over his or her life. To explore this possibility, in the regressions performed on exclusively wave 3 of the WVS, I exploit the inclusion of a question about religious upbringing, and recode it to be an indicator for an individual having been raised in a religious household. In these regression for WVS3, this indicator is included as an individual control to inspect for potential omitted variable bias. The WVS does not include individual-level data for labor force participation, income, or private health insurance. As a result, in the global panel I am only able to study the relationship between perceptions of life control and educational attainment.
Evidence in the global panel is strong but cannot rule out an issue of reverse causality. Could it be attending school that makes one feel more commanding of his or her own existence, rather than the other way around? Does higher perceived life control incentivize an individual to attend school, or does attending school empower one with a greater perception of life control? Further, the two could feed into each other, whereby those with initially high levels of perceived life control are more likely to attend school, and schooling further influences one’s perceived life control. The resulting simultaneity bias would confound the estimated causal effects of perceived life control on real outcomes.
To rule out the potentials for reverse causality and for simultaneity bias, I work in the spirit of Alesina et al. (2013), employing an epidemiological method to isolate the channel of influence concerning this cultural value. The method of this paper, too, considers second-generation immigrants in the United States. The March supplement of the Current Population Survey offers this capability by including a question for parental birthplace in addition to that of the respondent. The motivation to use these individuals is that they were born in the United States, under a fairly standard external environment of markets, institutions, laws, and policies (Alesina et al. 2013). The main distinction between them exists in the different cultural backgrounds brought from the home nations of an immigrant parent. For this secondary empirical strategy, this paper assigns to a second generation immigrant the mean value of perception of freedom of the nation of his or her father, as measured from the combination of waves 3 and 4 of the World Value Survey.
To avoid unobserved but potentially confounding elements of market factors that could exist between second-generation immigrants and those with ancestry in the United States, I only compare between second-generation immigrants. A caveat of this method is that to be included in this United States panel, the father of a second-generation immigrant must have come from a country for which data is provided on either wave 3 or wave 4 of the World Value Survey.
To explore evidence for the persistence of relationships observed in the global panel between perceived personal life control and educational outcomes, I regress the educational attainment of United States second-generation immigrants on the mean level of perceived life control in the respective home countries of their fathers, taken from the WVS. As in the WVS panel, I include not only the mean value assigned to an individual, but also its value squared. Further, in the CPS panels I include the natural log of the mean value of perceived freedom in the father’s home country in order to further explore the inverted U-curve relationship observed in the WVS global panel.
The first set of outcomes under study are dummy variables for graduating high school, completing a bachelor’s degree, and completing graduate school—whether a master’s degree, professional degree, or doctorate. I include controls for age, age-squared, gender, race, having ever been married, and an interaction of having ever been married with gender. I interact my dummy variable for gender and the indicator for having ever been married because it seems unlikely that homogenous effects exist between genders on labor market outcomes from ever having been married in the past or present. I include time-fixed effects in all regressions, and explore robustness of effects to additional fixed effects for geography by county in the United States. In the regressions on completing college, I include the dummy variable for having completed high school, and in the regressions on completing some graduate school, I include the dummies for both high school and college attainment.
Subsequently, I regress ancestral mean perception of personal freedom on outcomes of labor force participation, total income for those in the labor force, and having private health insurance. I include the original panel of individual-level controls, as well as dummy variables for graduating high school, college, and graduate school. I raise total income to the natural log as is generally standard. To study the relationship between education and cultural heritage in determining real outcomes in the market, I include interactions of an individual’s assigned value of cultural heritage with the dummy variables for educational attainment. I include time-fixed effects in all regressions, and explore robustness of effects to additional fixed effects for geography by county in the United States. I include controls for income when modeling outcomes for private health insurance. The fourth regression on having private health insurance considers only those second generation immigrants in the labor force, as a robustness check, and this eliminates over 30,000 individuals from the sample in that regression.
The cultural value in question may not itself affect individual outcomes in the market, but potentially could be picking up discrimination in the markets of the United States. In this scenario, it is not that the cultural value itself surrounding perceived freedom and returns influences individual outcomes; rather, that this person’s culture being different from that of the general mass of the United States effects discrimination for them in the market. I need to rule out the possibility that the relationship between the ancestral cultural value in question and the outcomes for education and labor and health insurance exists from this discrimination, rather than from influence on perceived returns. I include as a control the squared distance of an individual’s ancestral mean value of perceived freedom from the mean value of perceived freedom in the United States, provided by the WVS.
i. Results from WVS Global Panel
In the WVS global panel for wave 3 from Table 4, an indicated increase by an individual in the indexed value of perceived freedom by one out of ten predicts that an individual is about 4% more likely to complete secondary school, indicated by the positive coefficient on the individual response. The negative coefficient on the squared term for the cultural value suggests an inverted U-curve relationship between the perception of life control and secondary school attainment. These two coefficients for the perception of freedom are each significant at the 0.001% level. The inverted U-curve relationship suggested between perception of personal life control and secondary school attainment in Table 4 indicates the greatest probability of secondary school attainment for an individual indexing his or her perception of personal life control at a value of 8.94 out of 10. For nearly identical individuals in the model who indicated respective values of 7 and 8 on the index of perceived personal freedom, we should observe the individual indexing a value of 8 to be about 1% more likely to complete secondary school than his counterpart.
These results are robust to a series of individual-level controls as well as fixed effects for geography and interactions between geography and gender. The controls for age, age-squared, and being female are all significant at the 0.001% level, while controls for having been raised religious remain significant at the 0.05% level. Many country fixed effects are significant at the 0.001% level, while many others are still notably significant though at lesser levels. The same pattern of significance occurs for the secondary country fixed effects which are interacted with gender, suggesting that allowing fixed effects for geography to be dynamic to gender picks up notable variation between individual perceived life control and secondary school attainment, and therefore may reduce omitted variable bias. In regression 2, the same increase from 7 to 8 in indexed response to perceived life control also yields nearly a 1% increase in the probability of an individual attending college. Controlling for having attended secondary school in regression 3 changes the predicted effect of the same increase in perceived life control on probability of college attainment to be positive but roughly a third of the 1% effect indicated without the control.
In the WVS global panel for wave 4 from Table 5, the same incrementing of the index of perceived life control from 7 to 8 predicts a 0.5% increase in the probability of completing secondary school. The results in WVS4 are consistent with trends observed in WVS3 between perceived personal life control and educational attainment, but the magnitude of the effect is roughly halved. Also, controlling for secondary school attainment in the second regression on college attainment makes coefficients on perceived personal freedom insignificant. These results are robust to the individual-level controls and both sets of fixed effects for geography.
In the WVS4 panel, the controls for age-squared and female are all significant at the 0.001% level, but controls for raw age in years are now insignificant. As in WVS3, in WVS4 many country fixed effects are significant at the 0.001% level, as well as many secondary geography-fixed effects dynamic to gender. In regression 2 of Table 5, the increase from 7 to 8 in indexed response to perceived life control also yields over a 0.6% increase in the probability of an individual attending college. This pattern is consistent with the results in WVS3. Controlling for having attended secondary school in WVS4, regression 3 changes the predicted effect of the same increase in perceived life control on probability of college attainment to be negligible, and these coefficients on the variable under study are no longer significant. Data are not provided on religious upbringing in WVS4.
From Table 6, the relationships observed in the full global panel combining waves WVS 3 and WVS 4 are consistent with the trends seen respectively in each of the two panel waves alone. However, the combined global dataset has a more balanced panel of countries, and roughly double the sample size of either panel wave alone. In the full global panel, an increase by one out of ten in the indexed value of perceived life control indicated predicts just under a 1% greater probability in attaining completion of secondary school. This is consistent with trends observed in both of the separate panels. Coefficients on personal perception of freedom and its indexed value squared are all significant at the 0.001% level throughout, except in regression 3 where the coefficient on perceived freedom-squared is significant at the 0.01% level. These results are robust to a series of individual-level controls as well as fixed effects for geography and interactions between geography and gender.
The control for being female is consistently significant at the 0.001% level, while controls for age and age-squared vary in significance between the 0.001% and 0.01% levels. As in both WVS3 and WVS4, in the full panel from Table 6 many country fixed effects and their gender-conditioned complement fixed effects are significant at the 0.001% level. The full panel from the World Value Survey observes that the same increase in individual response to perceived life control from 7 to 8 yields just over a 0.5% increase in the probability of an individual attending college. Including a control for having attended secondary school changes the predicted effect of the same increase in perceived life control to increase the probability of completing college by 0.03%, negligible compared to the 0.5% indicated without the control.
ii. Results from the CPS Panel for the United States: Education
From the Current Population Survey, Table 7 demonstrates the relationship between paternal cultural heritage surrounding one’s perception of personal freedom in life and the attainment of secondary school by offspring in the United States. The values of perceived freedom assigned to an individual are the respective mean values of perceived personal freedom observed in the home country of that individual’s father in waves 3 and 4 of the World Value Survey. Consistent with the global panel relating an individual’s indicated perception of personal freedom and his or her educational attainment, in the panel on second-generation United States immigrants I observe an inverted U-curve relationship between ancestral beliefs surrounding life control and secondary school attainment in progeny in the United States.
Consistent with regressions on secondary school from the WVS panel, in the CPS the coefficient on ancestral perceived freedom is positive, while the coefficient on its squared value is negative. Perhaps surprising is that while the raw mean assigned cultural value observes a positive coefficient, the natural log of that raw mean cultural value observes a negative coefficient. All coefficients on the assigned ancestral perception of personal freedom are significant at the 0.001% level. The results for high school completion are robust to controls for age, race, and gender, as well as fixed effects for year and US county. All controls are highly significant.
Though the coefficients for high school attainment in the CPS observe the same pattern as the coefficients in the WVS panel, their distinct magnitudes produce different net effects from a cultural value surrounding perceived life control. In regression 3, incrementing mean ancestral perceptions of freedom in life from 7 to 8 out of 10 as before now yields a 9% decrease in the probability of the individual completing high school. This likely results from a greater magnitude in the coefficient on the ancestral culture-squared term, and is consistent with a negative coefficient on the natural log of the ancestral cultural value.
Table 8 is the model regressed on the outcome of receiving a bachelor’s degree. The trends with respect to the educational outcome are consistent with those concerning high school attainment in Table 7. There is an inverted U-curve relationship between ancestral beliefs surrounding life control and college attainment in progeny in the United States. The coefficient on ancestral perceived freedom is positive, while the coefficient on its squared value is negative. The natural log of the raw mean cultural value from the father’s home country observes a negative coefficient with respect to college attainment. Controls for completing high school, age, age-squared, and being native american are all significant at the 0.001% level. The control for gender is insignificant in the regression on college attainment, and what are initially quite high significance levels for controls on being black and being white are not robust to the inclusion of county fixed effects, as seen in distinctions between regression 1 and 2 versus regressions 3 and 4. In regression 3, incrementing the ancestral cultural value from 7 to 8 as before reduces an individual’s probability of completing college by 13%, a negative net effect of greater magnitude than the effect of the same incrementing on one’s probability of completing high school.
Table 9 gives the model’s fit for the outcome of completing graduate school. In these regressions, the coefficient on the raw value of ancestral mean perceived person freedom is not nearly as significant as in previous regressions. It does become significant in regression 3 with the inclusion of county-fixed effects, but observes a surprising relationship whereupon its coefficient is negative, but the coefficient on its squared value is positive. This relationship is inconsistent with the inverted U-curve trend observed in all previous models. Instead, this relationship is a standard U-curve. In regression 3, incrementing ancestral mean perception of personal freedom from 7 to 8 predicts that an individual is just over 1% less likely to complete graduate school. These results are robust to time and county-fixed effects. Controls for completing high school, completing college, age, age-squared, and gender are all significant at the 0.001% level.
iii. Results from the CPS Panel for the United States: Market Outcomes
Table 10 shows the relationship between culturally transmitted perceptions of personal freedom and labor force participation in second generation immigrants in the United States. Consistent with trends observed in the WVS and CPS panels on educational attainment, a positive coefficient on the raw value of ancestral perceptions of life control in conjunction with a negative coefficient on that value squared indicates an inverse U-curve relationship between the probability of one being in the labor force and the mean level of perceived personal freedom in the home country of that individual. However, the numerous interactions between educational attainment outcomes and the assigned value for ancestral perceived life control may convolute what had previously been a fairly simple trend. The large majority of these interactions are highly significant at the 0.001% level, indicating that conditioning of ancestral cultural influence and individual educational attainment has significant explanatory power for variation in labor force outcomes in the United States. Yet, the significance of these relationships between cultural perceptions of freedom and participation in the labor force is not robust to county-fixed effects. Controls for age, age-squared, gender, and being white are highly significant throughout. Upon their inclusion, controls for have ever been married and its interaction with gender are each significant at the 0.001% level.
In regression 1 from Table 10, a high school dropout would be 4% less likely to be in the labor force if their ancestral package of cultural values surrounding perceived personal freedom in life was incremented from 7 to 8 out of 10. Alternatively, the same incrementation of the assigned cultural value surrounding perception of freedom would predict that a college graduate is 2% more likely to be in the labor force when modeled using regression 1.
In regression 3 the inclusion of the measurement of cultural distance from the United States is shown to be significant at the 0.001% level, but this is not robust to the inclusion of county-fixed effects. Regression 4 demonstrates that nearly all of the effects of culture, education, and their interactions observed to be highly significant in previous regressions are not robust to the inclusion of county-fixed effects. However, notable still is the incredibly high level of significance (0.001%) for the coefficient on the interaction of the ancestral mean cultural value for perceived personal freedom with the completion of high school in predicting individual labor force participation.
Table 11 shows the relationship for those second-generation immigrants in the labor force between total income and ancestral perceptions of personal freedom in life. Regression 1 demonstrates that though my quadratic treatment of the cultural value in question is insignificant in predicting individual income, when raised to the natural log in regression 2 the data element has significant explanatory power for income raised to the natural log. Further, this relationship is robust to the inclusion of my set of individual controls, as well as robust to fixed effects for not only time but also geography by county.
As in Table 10, the interactions in Table 11 between educational attainment and the assigned ancestral cultural value under study are highly significant, and here the significance of coefficients on interactions between the cultural value and respectively completing high school and college are robust to both time and county-fixed effects. The inclusion of my measure of cultural distance in the value under study from its level in the United States does not have explanatory power in the model for income among those in the labor force. Controls for age, age-squared, gender, and both elements of the gender-dynamic control for marital status are all significant at the 0.001% level. Racial controls are largely insignificant in this model for income, but may be absorbed by assigning an individual the cultural value of his or her paternal ancestry, as this would undoubtably be correlated with ethnicity.
In the fully-controlled regression 4 in Table 11, a 1% increase in ancestral perception of personal freedom, taken from the mean value of it observed in the home country of the individual’s immigrant father, results in a 1.26% increase in total income for a high school dropout. Alternatively, incrementing the ancestral cultural value from 7 to 8 out of 10 for a black, female college graduate who is thirty years old and has been married at least once predicts a decline in total income of over $2700 in regression 4. The interactions between educational attainment and culture allow for this fairly dynamic effect in market outcomes from cultural values surrounding freedom and life control.
Table 12 shows the relationship for second-generation immigrants between being covered by a private health insurance plan and ancestral perceptions of personal control over one’s life and life outcomes. Regression 1 demonstrates that though my quadratic treatment of the cultural value in question is significant in predicting individual outcomes in the market for private health insurance, when raised to the natural log in regression 2 the data element has more significant explanatory power for the probability of being covered by private health insurance. The measure I constructed of cultural difference from the general population of the United States is also highly significant (0.01%) in predicting outcomes for private health insurance. Controls for the natural log of total income, finishing high school, finishing college, age, age-squared, gender, race, and marital status are all highly significant at the 0.001% level.
Coefficients on the interactions of the raw assigned cultural value with educational attainment respectively in high school and college are each highly significant at the 0.001% level. Except for the coefficient on college, the significances of all these controls are robust in regression 4 in Table 12 to both county-fixed effects and the choice to study private health insurance outcomes for only those individuals from the sample who are in the labor force. From regression 4, a high school dropout whose assigned ancestral value of perceived freedom incremented by one from 7 to 8 out of 10 is 14% less likely to have private health insurance. Alternatively, for a college graduate, this incrementation only reduces the probability that the individual has private health insurance by about 0.5% in regression 4.
At a high level of significance, the results from the WVS indicate that individuals who exhibit a higher level of perceived control over their life outcomes also exhibit a greater probability of having attended secondary school and college. These results are robust to many individual-level controls that could affect the empirical relationship between perceived freedom and educational attainment, and they are robust to simple geographic as well as gender-conditioned geographic controls. Between individuals of the same age, sex, nationality, and religious background, those persons with higher levels of perceived personal freedom and control over their life outcomes are significantly more likely to be educated. As discussed previously, the causal channel here could exist in either direction between perceived control over one’s life and educational attainment. Also, an essential unobservable here is parental income for the individual, as family financial means might directly affect both perceived personal freedom and one’s educational attainment.
The quadratic relationship between education attainment and perceived life control indicates that there may be a degree of indicated perceived control over life outcomes that is so great as to be naive, or arrogant. Under this thinking, an individual is perhaps relatively oblivious to the structural elements influencing his or her outcomes in life. This evidence suggests that my conjecture for perceived life control proxying perceived returns to effort is fairly strong, but clearly too simplistic. The highest levels of perceived life control might actually correspond to relatively lower perceived returns in life to inputs and effort, from an agent being naive about the role of factors external to oneself in determining life outcomes.
The secondary CPS analysis isolates the causal channel by providing evidence that the cultural transmission of values surrounding perceived personal freedom exhibits lasting influence on real outcomes for offspring in educational attainment and the markets for labor and private health insurance. The same quadratic relationship observed in the global panel is found among second-generation immigrants in the United States between perceived freedom and its value squared, and completing high school, college, and graduate school. However, in the CPS panel the coefficient on the squared term of the assigned cultural value is of greater magnitude than in the WVS panel. As a result, the standard incrementation of 7 to 8 out of 10 on the index of perceived personal freedom actually predicts a lower probability of educational attainment. Nevertheless, the quadratic relationship observed in the global panel persists. Paternal transmission to offspring of the cultural values from the father’s home country explains significant variation in the educational attainment of that offspring. This causal relationship exists controlling for a consistent institutional environment, time, geography, and a number of individual-level characteristics.
I extend the pathway of cultural heritage affecting educational attainment to explore its effects on real outcomes in the markets for labor and private health insurance. By including interactions of the assigned cultural heritage value for perceived personal life control with indicators for several levels of individual-level educational attainment, I give evidence that the effects of cultural heritage in the market are dynamic to one’s level of education. Generally, the trend appears that greater levels of education dilute in magnitude the effect of cultural heritage surrounding perceived control over life outcomes.
At lower levels of education—specifically those who did not complete high school, second-generation immigrants in the United States whose parental ancestors observe greater average perceptions of life control (7 vs. 8 out of 10) are slightly less likely to be in the labor force; however, if they are, they are expected to have substantially higher income. Controlling for income, they also are much less likely to have private health insurance, perhaps from risk aversion and information gaps. This thinking is that those who are culturally conditioned to perceive relatively less control over life outcomes consequently perceive greater uncertainty in their lives, and are more likely to pursue private health insurance as a method of risk aversion.
VI. Brief Closing
This paper provides evidence for the role played by culturally transmitted values surrounding personal life control in determining an individual’s outcomes surrounding education, the labor market, and the market for private health insurance. The United States panel may observe distinct effects on educational attainment from the perception of personal freedom from those effects in the World Value Survey because of the simultaneity bias between perceived personal life control and educational attainment. In the WVS panel, individuals indicate both their own educational attainments and their perceived personal life control, whereas in the CPS I assign an individual a mean value of this perceived freedom from respondents in his or her father’s home country.
As a result, further work should explore the highly statistically significant but distinct empirical relationships in predicting educational attainment between the global panel and the panel for the United States from perceived control over one’s life outcomes. Individuals selecting their perceived level of control over life outcomes represents a different data element entirely than assigning an individual the national mean level observed from all respondents in their father’s home country; further, such distinct elements are subject to different confounding factors in the study of their effects on real outcomes. Also, future work should include the necessary unobservable in this data set which is parental income, as its addition would ameliorate bias between perceived control over life outcomes and treatments to schooling.
Additionally, the use of perceived personal freedom and life control to proxy perceived returns to one’s actions in the market represents a specification that is perhaps intuitive a priori, but which remains incredibly crude and limited. Any real connection between perceived personal life control and the perceived returns of an action requires further, more thorough research to determine.
Alesina, Alberto, Paola Giuliano, and Nathan Nunn. “On the Origins of Gender Roles: Women and the Plough.” The Quarterly Journal of Economics 128, no. 2 (2013): 469-530. doi: 10.1093/qje/qjt005.
Jensen, Robert. “The (Perceived) Returns to Education and the Demand for Schooling.” The Quarterly Journal of Economics 125, no. 2 (2010): 515-48. doi:10.1162/qjec.2010.125.2.515.