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CReAM Applied Economics seminar presented by Rebecca Dizon Ross (Chicago Booth)

23 September 2019, 4:00 pm–5:30 pm

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Not Playing Favorites: An Experiment on Parental Preferences for Educational Investment (with James Berry and Maulik Jagnani).

Event Information

Open to

All

Organiser

Economics Reception

Location

Ricardo Lecture Theatre
107: Drayton House
30 Gordon Street
London
WC1H 0AX
United Kingdom

How do parents choose to allocate investments across children? Do they maximize the returns to their investments (total household earnings), or equalize across their children because of an aversion to cross-sibling inequality? In this paper, we conduct the first experiment that identifies parents’ preferences for investing in their children’s education. The experiment exogenously varies the short-run returns to educational investments to identify the degree to which parents care about (a) maximizing total household earnings, (b) minimizing cross-sibling inequality in “outcomes” (i.e., child-level earnings), and (c) minimizing cross-sibling inequality in “inputs” (i.e., the investments each child receives). We find that while parents care about both maximizing total household earnings and minimizing inequality in inputs, they place a high value on equality of inputs. Parents choose exactly equal inputs 35% of the time and forego40-50% of their potential experimental earnings due to inequality aversion in inputs. In contrast, we find no evidence that parents are averse to inequality in outcomes.

The link to the paper is: https://faculty.chicagobooth.edu/rebecca.dizon-ross/research/index.html

About the Speaker

Rebecca Dizon Ross

at Chicago Booth

More about Rebecca Dizon Ross

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