Doctoral Dissertation Research in Economics: The Effect of Access on Beliefs

University Of California-San Diego, La Jolla CA

Investigators

Abstract

Although governments, academics and policy-makers agree about the large benefits of education in societal outcomes, investment in education amongst the poor remains low. One reason, cited by researchers in economics, is that poor people have low expectations about the value of education when compared to estimates from data. Another potential explanation is psychological. Work in sociology finds that poor families have more pessimistic outlooks on the future value of education due to obstacles like low quality schools, larger financial constraints and racial discrimination. Perhaps most striking, recent empirical studies find that providing poor people access to resources increases their expectations on the value of education, despite no information being provided about the value per se. Building on these findings, one possible theory is that low expectations help individuals cope with low access to an investment. Rather than lamenting a small chance to make a potentially life-changing investment, individuals feel better by underestimating its value, a theory called "the sour grapes effect". The goal in this project is to utilize the economic tools of a laboratory setting to explore this effect, and the relationship between access and beliefs more broadly. The lab provides a clear methodological advantage as empirical studies to date suffer from likely confounds. The intellectual merit of this proposal lies in attempting to study a real-world problem with a novel psychological intuition that can be framed using rigorous theory and investigated through experimental methodologies. The research agenda is grounded in the theory of decision-making under ambiguity and may document a new violation of (Subjective) Expected Utility theory. The research agenda makes some important contributions and has potentially broader impacts. Exploring the access-based beliefs could increase our understanding of how perceived (not estimated) beliefs of the returns to education are formed, an important determinant of schooling decisions. Furthermore, access-based beliefs may be the source of a cycle of low access, and investment that traps people in poverty. Lastly, they would suggest a novel pathway for the efficacy of social programs that expand access to public goods, namely that optimistic beliefs may play an important role. Ultimately, research that furthers our knowledge on how subjective beliefs on the returns to investment are formed can help create better models of decision-making under uncertainty and inform policy-makers in a variety of contexts.