MATRIZ PARA LA ESTIMACION DEL RIESGO

This section has tested the robustness of our results to changes in several key assumptions about our model and the data. For each intervention in each sen- sitivity check, at least one groups’ expectations are made less accurate, violating our criteria for intervention success. When α = 0, the simple intervention leads to overestimation for Coloureds and Whites if the sample is restricted to those that are employed, if we change assumptions about the career length, or if we consider credit constraints. Also, it leads to overestimation of males and females if ROPE is specified according to gender (about 18% and 2%, respectively). When α = 0, the standard intervention leads to overestimation for females (about 20%) and underestimation for males (about 36%), while it leads to overestimation for Coloureds in all other sensitivity checks. The targeted intervention leads to over- estimation for males and females (about 14% and 5%, respectively), while it also leads to overestimation for Coloureds in all other sensitivity checks. Lastly, when α = 0.5, the full intervention leads to underestimation for females (about -3%) while in all other sensitivity checks it leads to underestimation for Coloureds just like the results in 2.5.4.

Overall, the results of these sensitivity checks are important because they demonstrate that the dangers of information provision do not occur simply be- cause of a very specific combination of model and data assumptions. If the ROPE model is changed substantially, or if we change our assumption about the source of heterogeneity, it is clear that the dangers of information remain realistic possi- bilities (as opposed to simply being theoretical possibilities).

While beyond the scope of this chapter, there are at least three significant extensions to ROPE that could make it considerably more realistic (though more complicated) but that would require either substantial changes to the model or data that is not available in CAPS. These possible extensions are 1) the inclusion of positive education costs, 2) the option of repetition, and 3) the option of re- entry into education once an individual has entered the labour market. The likely impact of each of these extensions on the conclusions of this chapter is discussed below:

1. The inclusion of positive education costs for each grade beyond grade 11 should reduce the net value of grade 12 and the pathway value of grade 12. It may also change the level of overestimation for each race. However, the results of the interventions should remain qualitatively similar as they are driven by changes to the expected relative net benefits of different education pathways, and such changes would occur regardless of the costs of education. 2. If youth are able to repeat a grade that they fail in the following year, this option of repetition will increase the gross return to that grade of education. However, whether or not this increases the pathway value of grade 12 will de- pend on the pass probabilities for each race. Though not reported, we tested one example extension to ROPE, where grade 12 may be repeated one time

with the same probability of failure and where a pass can only occur without exemption on this second attempt. In this situation, compared to the orig- inal model, the pathway value percentage for African youth increases from 52.1% to 56.6% but the pathway value for White youth decreases slightly, from 67.2% to 67.0%. Regardless of the pathway value percentage, the over- all gross value of the grade being repeated will increase (as repetition is always an option that is only chosen when it is relatively better than the alternative of entering the labour market). So it should be noted that both relative values of pathways and the absolute values of different levels of edu- cation will be different in a model with repetition. However, this should not change the potential dangers of information interventions. Regardless of the options available for repetition, individuals still need to make choices based on the expected relative benefits of different levels of education (particularly in ROPE, the net value of grade 12). In the example extension we tested, the results of the four interventions remain qualitatively the same with no intervention meeting our criteria for success for both values of α.

3. Unlike repetition and positive education costs, the option to re-enter educa- tion after a period in the labour market may have implications for the dangers of information provision. In particular, if an individual can change pathways after experiencing a negative outcome (such as unemployment or obtaining a low wage job), then the decision to continue onto grade 12 directly after grade 11 becomes much less critical. By extension, information provision that can impact on this decision also becomes less critical. For example, following the Standard intervention, African youth have lower expectations of the net value of grade 12. Suppose that this caused them to leave school

after grade 11 but that they later realised it was a mistake and so re-enrolled in grade 12 one year later. In this case, they would not have lost a lifetimes’ worth of higher income, as would have been the case if re-entry to school was not allowed. Further research would need to be done to explore how significant the possibility of re-entry into education is likely to be.