Seminario "Educational Investments Mistakes and Skill Disparities Among Children"
Lunes 17/2, 17.15h
Presentado por Ami Ichikawa
Paper abstract
This paper studies how parents’ preferences and beliefs about their children’s academic performance shape educational investment decisions and subsequent skill disparities. Using detailed data on parental beliefs and a randomized information intervention in Malawi, I develop and estimate a structural model of parental investments that embeds beliefs distortions into parents’ trade off between own consumption and improvements in children’s academic performance. The model is validated using experimental variation from an information intervention that corrects belief inaccuracies. I find that distortions on parents’ beliefs have sizable impacts on skill formation and in narrowing skill disparities. This conclusion stems from two main findings. First, parents show a strong preference for compensating for initial differences in siblings’ performance: when offered a subsidy for educational inputs they direct investments toward lower scorers, leading to reductions in within household disparities. Second, distortions in parents’ beliefs interfere with their intended investment strategy: while they believe they target lower performing children, optimistic bias leads to underinvestment. Correcting information frictions increases investments significantly for students at the bottom of the score distribution and is twice as effective at reducing within household inequality compared to a subsidy alone.
This paper studies how parents’ preferences and beliefs about their children’s academic performance shape educational investment decisions and subsequent skill disparities. Using detailed data on parental beliefs and a randomized information intervention in Malawi, I develop and estimate a structural model of parental investments that embeds beliefs distortions into parents’ trade off between own consumption and improvements in children’s academic performance. The model is validated using experimental variation from an information intervention that corrects belief inaccuracies. I find that distortions on parents’ beliefs have sizable impacts on skill formation and in narrowing skill disparities. This conclusion stems from two main findings. First, parents show a strong preference for compensating for initial differences in siblings’ performance: when offered a subsidy for educational inputs they direct investments toward lower scorers, leading to reductions in within household disparities. Second, distortions in parents’ beliefs interfere with their intended investment strategy: while they believe they target lower performing children, optimistic bias leads to underinvestment. Correcting information frictions increases investments significantly for students at the bottom of the score distribution and is twice as effective at reducing within household inequality compared to a subsidy alone.
Ami Ichikawa
Ph.D. candidate in Economics, University of Arizona. Her main research interests are education and political economy.