Working Paper: NBER ID: w25513
Authors: Orazio Attanasio; Teodora Boneva; Christopher Rauh
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.
Keywords: parental investments; educational outcomes; returns to investment; hypothetical scenarios
JEL Codes: I24; I26; J13; J24; J62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental beliefs about returns to investments in children's education (I26) | Actual investment decisions (G11) |
| Perceived returns to parental time investments (I26) | Actual parental time investments (J22) |
| Perceived returns to material investments (G11) | Actual material investments (G31) |
| Perceived returns to moving to a better school (I26) | Actual investment decisions (G11) |
| Perceived returns to material investments are higher when children attend better schools (I26) | Perceived complementarity between home inputs and school quality (J24) |
| Higher perceived returns to investments (G11) | Higher actual investments (E22) |