An Empirical Test of the Heckman and Rubinstein GED Mixed-Signal: Evidence from Prison

Economists have begun to embrace the notion, already accepted by the market, that GEDs and High School Diplomas signal similar cognitive abilities, but different non-cognitive abilities. To better understand this phenomenon and its implications, this paper presents a study of an education environment, prison, which provides natural controls for non-cognitive abilities. The study reveals similarities in decisions between the two types of agents that are surprising in light of decisions made in standard educational environments. The results support the mixed-signal theory and furthermore suggest that stricter enforcement of discipline and other non-cognitive attributes may help to reduce dropout rates in non-prison educational facilities. Acknowledgements: For helpful comments and suggestions, I thank Daniel Houser, Omar Al-Ubaydli, Bryan Caplan, Tyler Cowen, Thomas Stratmann, and Alexander Tabarrok, and participants in research seminars at George Mason University and the 2008 Conference of the Association of Private Enterprise Education. Special thanks to Adalbert Meyer for comments on an earlier version of this paper. I gratefully acknowledge research support from the Interdisciplinary Center of Economic Science and the Mercatus Center.