Economic Mobility Beliefs and Parental Investment: Experimental Evidence (WP-26-12)
Rebecca Ryan, Ariel Kalil, Marlis Schneider, Mesmin Destin, David Silverman, and Ivan Hernández
Economic theory predicts that parents invest more in children when expected returns are higher. The authors test whether beliefs about societal economic mobility affect these expectations and subsequent investment decisions. In a between-subjects experiment with 997 U.S. parents, they randomly assigned participants to view information emphasizing either upward or downward economic mobility. Parents in the upward mobility condition reported higher perceived returns on investment and exhibited greater investment behavior: They allocated 16% more time to a child-focused task and reported 12% higher willingness to pay for educational resources. With regard to time investments, treatment effects on the decision to invest (extensive margin) were null, while effects on investment intensity (intensive margin) were significant. Results did not vary by parental income or education.
This paper is published in Economic Letters.