Doctoral Dissertation Research in Economics: How Does Ability Information Impact Educational Investments?

Stanford University, Stanford CA

Investigators

Abstract

Doctoral Dissertation Research in Economics: How Does Ability Information Impact Educational Investments? Abstract: PI Pascaline Dupas, co-PI Rebecca Dizon-Ross In recent years, governments across the developing world have invested heavily in improving educational access. However, despite these measures, educational inequalities still persist across generations. This project will investigate a relatively unexamined hypothesis for educational inequalities: that poorer parents have more inaccurate information about their children's ability, which prevents them from making optimal investments in their children's schooling. The research will explore this hypothesis through a randomized controlled trial in Malawi. First, it will measure parents' beliefs about their children's aptitude and school performance. It will then provide randomly selected parents with information about their children's true performance, and measure the effect on educational investments. The investigators will thus be able to address the following research questions: Does ability information impact investments? Can poor information explain part of the socioeconomic gap in educational attainment? In addition, by examining whether parental investments increase or decrease (relative to investments in the control group) depending on whether parents find out if their children's performance was lower or higher than expected, the research will address the question: how do schooling investments depend upon a child's actual measured ability? Since most models of optimal human capital investment show that efficient schooling investments depend upon a child's ability, this research will contribute to the literature by examining a potentially important source of inefficient investments in education -- that investments depend on perceived, not true, ability. Moreover, the study is expected to contribute to the literature examining whether ability and schooling are complements or substitutes, and whether parents invest more if their child has lower or higher ability. Empirically estimating these relationships is difficult because of reverse causality -- because investments may increase measured ability, one cannot distinguish whether high ability is a cause or effect of high investment -- and omitted variable bias. The proposed research improves upon the identification of previous work by using information shocks to create exogenous variation in (perceived) ability.