In our podcast-series ‘Profcast’, we talk with the professors of the Faculty of Business and Economics. This week, our guest is: Sunčica Vujić.
Sunčica: “Econometrics entails bringing theory to the data. For example, the human capital theory says that education is an investment. We, as econometricians, want to see what the returns of additional years of education are. With returns, we usually think in terms of future wages and labour market prospects. However, it is not just a simple correlation between education and wages, because wages are also affected by other factors like your previous work experience, the sector you work in and your gender. So, you have to use an ordinary least squares regression to estimate the function including all the factors that affect wages, based on the data. The coefficient that we estimated next to your education variable represents the return of an extra year of education.“
Professor Sunčica Vujić wrote the article ‘The crime reducing effect of education’.
Sunčica: “We used the same econometric toolkit that we developed for the relationship between education and wages to estimate the link between education and crime, a non-monetary return. There are three key mechanisms to explain this relationship:
- The income effect. The more education you have, the better labour market prospects you have. If you commit a crime, you have a higher opportunity cost. You have a lot to lose in this case.
- Incapacitation. If you are at school, your time is limited to do other things, to persue other activities, including risky activities like commiting crime.
- Additional years of education make individuals more mature, more patient and more risk averse.
Most importantly, in policy-making, you can use education as a lever to prevent crime.”
Listen to the episode with Sunčica Vujić on Spotify, Apple Podcasts, DS Podcast-app, YouTube or SoundCloud: