Where a child goes to school could mislead parents on the investments they choose to make – or forego – in support of their education.
Research by Terry College of Business economics professor Josh Kinsler shows a link between a student’s performance in relation to classmates and the investment that parents make to help their child succeed academically, which could lead to better post-secondary opportunities.
“The evidence we find is that for parents who think that their child is further behind, they’re the ones who act,” he said. “They’re the ones who start helping more with homework, and they’re more likely to hire tutors.”
But understanding what leads many parents to make increased financial investments in their children’s education while other parents stand pat could shed light on issues like inequality because students often are grouped by income and race.
“It’s an investment in their future,” Kinsler said. “Education is like any other asset. You want to understand what is the appropriate amount to invest or the appropriate way to invest. How that may play out in a situation where people are not fully informed is the research problem we’re thinking about.”
Relatively little attention has been given to the role of uncertainty, information and learning in parental decision making, according to the paper, “Local Distortions in Parental Beliefs over Child Skill.” This area of research could benefit parents, schools, and even policymakers.
Parents may not understand where their child stands in the distribution of skills nationally, and what types of investment would be the most productive. Even after attending parent-teacher conferences, it can be difficult to unravel the information because the relevant comparisons are unclear, said Kinsler, who has two children, ages 10 and 8.
Parents resort to relying on a “keeping up with the Joneses” approach as the handiest measuring stick, he said. They compare their child to fellow students in the same school, neighborhood or circle of friends to make their decisions.
Parents of a student attending a local school with below average students are more likely to believe that their child is above-average overall, according to the research.
“If I’m making the comparison to a bunch of students who are not so great, I’m going to think my kid is better,” he said. “But if I’m making comparisons to students who are fantastic, then it’s going to make me think my kid is not so great. And that’s a call to act.”
Investment rises by a considerable amount for students who are perceived as having below-average skills, and higher achievement typically follows. Those comparisons could trap parents into thinking they don’t need to do anything, when they actually need to invest in their child’s education and skills, according to the research.
In the working paper, Kinsler and Ronni Pavanof the University of Rochester analyzed data from the Early Childhood Longitudinal Study-Kindergarten Class of 1999 to investigate the relationships between information, parental beliefs, investment and the evolution of child skills. Their research examined how parent beliefs are influenced by the local environment, especially related to decisions by low-income households.
“We live in a world of massive inequality, driven by inequality in opportunities, initial conditions, and actions that households take. What we illustrate is that information distortions can contribute to this inequality,” Kinsler said. “I still think that building skill and building human capital is the best way to ensure successful outcomes in the future.”