Working Paper: NBER ID: w31512
Authors: Manasi Deshpande; Rebecca Dizon-Ross
Abstract: How does the expectation that a child will receive government benefits in adulthood affect parental investments in the child's human capital? Most parents whose children receive Supplemental Security Income (SSI) benefits overestimate the likelihood that their child will receive SSI benefits in adulthood. We present randomly-selected families with the predicted likelihood that their child will receive SSI benefits in adulthood. Reducing parents' expectations that children will receive benefits in adulthood does not increase investments in children's human capital. This zero effect is precisely estimated. Likely explanations include parents working more themselves, non-financial goals influencing investment, and families facing investment constraints.
Keywords: social safety net; human capital investment; SSI benefits; parental investment; anticipatory effects
JEL Codes: H20; I20; I30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental expectations of government benefits in adulthood (H55) | Investments in children's human capital (J24) |
| Information shock (D80) | Parental expectations of government benefits in adulthood (H55) |
| Parental expectations of government benefits in adulthood (H55) | Take-up of educational resources (I21) |
| Information shock (D80) | Investments in children's human capital (J24) |
| Updated beliefs about SSI removal (J65) | Parental investment decisions (G11) |
| Parental investment decisions (G11) | Tutoring and job training resources (M53) |