Poster #57 - How Does Family Educational Investment Depend on Children’s Academic Ability? An Experiment on Information Shocks

• In Event: Saturday Poster Luncheon

Abstract

This study investigates how children’s academic abilities influence education investment in multi-child families, using randomized information shocks as an exogenous factor. We conduct a large-scale randomized controlled trial (RCT) involving 3,750 households with two children in rural China. Half of the households (N=1,878) are assigned to a treatment group, where they receive information about their children's test scores, while the control group does not receive this information. We then compare changes in parental educational investment among households with similar baseline beliefs about their children’s abilities, based on whether they received high- or low-ability signals. Specifically, we test whether parents invest more after high-ability signals, suggesting a complementary approach, or after low-ability signals, indicating a compensatory approach.

This study finds that parents generally prioritize equality across most domains of educational resources, as well as in both high- and low-stakes educational decisions. Their allocation of financial support, energy, attention, and time largely unaffected by differences in their children's academic ability. Moreover, we observe a complementary strategy when it comes to a few types of high-value learning resources: parents tend to invest more in their higher-performing children when purchasing expensive learning technologies, such as technology-aided learning pads and electronic reading devices. We also examine heterogeneity in the causal effect of children’s academic ability on family educational investment across several key family and child characteristics: household wealth, child gender, sibling gender composition, and birth order.

This study provides rigorous experimental evidence by leveraging randomized information shocks to address the endogeneity issue in the longstanding economic question of the relationship between children’s endowments and family educational investment. It also offers the first evidence on how parents allocate resources when making high- and low-stakes educational decisions and how these strategies vary across different family and child characteristics. The findings contribute to a more comprehensive understanding of parental behavior in response to policy interventions, supporting the development of social policies aimed at mitigating the risks of negative intra-household spillover effects in both high- and low-stakes contexts. Furthermore, this research provides theoretical insights into behavioral economics and informs the design of more effective and equitable policies, both in the U.S. and internationally, to address disparities arising from unequal parental resources and improve outcomes for all children.

Author

• Xinjie Zhang, Vanderbilt University
  Presenting Author