Parental Beliefs About Returns to Different Types of Investments in School Children

50 Pages Posted: 4 Feb 2019 Last revised: 18 Sep 2021

See all articles by Orazio Attanasio

Orazio Attanasio

Dept of Economics Yale University; Institute for Fiscal Studies (IFS); University College London - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Teodora Boneva

University College London - Department of Economics

Christopher Rauh

University of Cambridge - Faculty of Economics

Date Written: January 2019

Abstract

Parental investments as well as school quality are important determinants of children’s later-life outcomes. In this paper, we shed light on what determines parental investments and study how parents perceive the returns to parental time investments, material investments and school quality, as well as the complementarity/substitutability between the different inputs. Using a representative sample of 1,962 parents in England, we document that parents perceive the returns to 3 hours of weekly parental time investments or £30 of weekly material investments to matter more than moving a child to a better school. Parents perceive the returns to time and material investments to be diminishing and perceive material investments as more productive if children attend higher quality schools. Perceived returns do not differ with the child’s initial human capital or gender and, surprisingly, we find no differences in perceived returns by the parents’ socioeconomic background. Consistent with parental beliefs playing an important role in parental investment decisions, perceived returns are found to be highly correlated with actual investment decisions.

Suggested Citation

Attanasio, Orazio and Boneva, Teodora and Rauh, Christopher, Parental Beliefs About Returns to Different Types of Investments in School Children (January 2019). NBER Working Paper No. w25513, Available at SSRN: https://ssrn.com/abstract=3328380

Orazio Attanasio (Contact Author)

Dept of Economics Yale University ( email )

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Institute for Fiscal Studies (IFS)

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University College London - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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Teodora Boneva

University College London - Department of Economics ( email )

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Christopher Rauh

University of Cambridge - Faculty of Economics ( email )

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