This paper presents an economic model of how teenagers' outlooks-specifically their locus of control-affects human capital investments. Locus of control, or internal-external attitudes, is a psychological measure of a person's belief regarding the causal relationship between their own behavior and outcomes. The effect of eighth graders' locus of control on their subsequent decisions to complete high school and to attend college is empirically examined using the National Education Longitudinal Study. The results indicate that locus of control does indeed strongly influence the decision to graduate from high school. The model has testable implications that distinguish it from a model in which locus of control is a proxy for unobserved ability. The empirical results suggest that locus of control operates through teenagers' expectations of the returns to human capital investments.
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Coleman et al. (2003) studied this question.
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