Academic journal article Journal of Forensic Economics

An Update of the Educational Attainment Model for a Minor Child

Academic journal article Journal of Forensic Economics

An Update of the Educational Attainment Model for a Minor Child

Article excerpt

I. Introduction

In our 1992 paper (Spizman and Kane, 1992) an ordered probit estimation technique was used to predict the lost earning capacity of a wrongfully injured minor child. Prior to this paper the methodology of establishing the lost earning capacity was to apply the average earnings for each educational group (high school, some college, college, graduate school etc) to the wrongfully injured child. There was no method of determining the probability of the injured child attaining the educational level associated with the average earnings for that educational group. The ordered probit educational attainment model (the SK model) provided a solution to this problem by estimating the probabilities of alternative levels of educational attainment of an injured child based on familial and demographic characteristics. These characteristics included gender, race and parents' educational levels. By combining these estimates with information concerning expected earnings for each potential level of educational attainment, the present value of the child's expected lifetime earning stream can be estimated. (1)

Gill and Foley (1996) modified the original SK estimates by adding additional variables and utilizing a different sample population. The purpose of this paper is to update both studies by including new data that did not exist when either study was completed.

II. Why an Update?

The initial SK study utilized data from The National Longitudinal Study of the High School Class of 1972 (NLS72). While the NLS72 is a rich data set, the National Longitudinal Survey of Youth (NLSY) is even richer. Since all respondents in the NLS72 sample had completed high school, the SK model could not predict the probability that an individual will complete high school. (2) Gill and Foley (1996) remedied this problem by utilizing NLSY data from 1979 through 1992 to estimate a variation of the SK model. The NLSY sample included information on individuals who did not complete high school. They also expanded the list of variables to include parents' occupation, family composition, number of siblings, the religion in which an individual was raised, and variables that serve as proxies for the amount of reading that took place among the adults in the household (newspaper subscriptions, magazine subscriptions, and the presence of a library card in the household).

Gill and Foley's re-estimation and expansion of this model validated the SK model by showing the robustness of the model's results. The Gill and Foley (GF) study used NLSY data collected from 1979 through 1992. The original sample included individuals who were between 14 and 21 years of age at the start of 1979. (3) While the NLSY data used in the GF study offers the advantage of providing information on individuals who had not completed high school, it does not contain completed educational attainment for those who completed their highest level of education after 1992. Those individuals who were 14 years old in 1979 would have been only 27 in 1992. Even with continuous educational enrollment, many individuals working towards a Ph.D. degree would not have completed this degree by age 27. Those who spent several years in the military to assist in the financing of their education might have not finished master's level programs by this age. Since many MBA programs require several years of work experience, many individuals intending to complete such a degree would also not have attained this degree by this age. Those nontraditional students who spent some time at work or in childrearing before completing their education would also, in many cases, not have completed their education by 1992.

Today, however, the NLSY provides 6 additional years of data on the educational attainment of these individuals. This additional time span makes it possible to provide a better estimate of completed educational attainment. The 14-year old respondents in 1979 would have been 33 years old in 1998, while the 21-year old 1979 respondents would have been 40 years old. …

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