Working Paper: NBER ID: w14695
Authors: Flavio Cunha; James J. Heckman
Abstract: Recent research on the economics of human development deepens understanding of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequalities in family environments and investments in children are substantial. They causally affect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for different outcomes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child's life cycle than others. Optimal child investment strategies differ depending on target outcomes of interest and on the nature of adversity in a child's early years. For some configurations of early disadvantage and for some desired outcomes, it is efficient to invest relatively more in the later years of childhood than in the early years.
Keywords: inequality; human development; capabilities; psychology; investment strategies
JEL Codes: A12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| family environments (J12) | cognitive capabilities (D91) |
| family environments (J12) | noncognitive capabilities (D80) |
| investments in children (J13) | cognitive capabilities (D91) |
| investments in children (J13) | noncognitive capabilities (D80) |
| cognitive capabilities (D91) | success in life (I31) |
| noncognitive capabilities (D80) | success in life (I31) |
| early investments (G24) | cognitive capabilities (D91) |
| early investments (G24) | noncognitive capabilities (D80) |
| investments in capabilities (E22) | success in life (I31) |
| early adversities (I24) | optimal investment strategies (G11) |