Intergenerational Transmission of Education: Internalized Aspirations versus Parent Pressure (Job Market Paper) [pdf]
Abstract: High school graduates in Germany who lack parents with college experience are 40 percentage points less likely to attend college than those with college-educated parents, despite the fact that in Germany college is free. This study provides evidence that parental influence explains a significant portion of this socio-economic gap through at least two channels: one, parental pressure and two, the intergenerational transmission of beliefs and preferences. To understand parental influence, I conduct a field experiment with 1,195 students and 819 parents in Germany. Importantly, I experimentally make students' stated college plans visible to parents. In the first finding, visibility to parents doubles the socio-economic gap in college plans to 27 percentage points. This is mainly driven by a large increase in college plans among students with college-educated parents. To disentangle mechanisms, I collect detailed survey data on students' and parents' subjective expectations for various career tracks and estimate a structural model of career choice under uncertainty. Model simulations indicate that 40% of the socio-economic gap in college plans is explained by parental pressure and 44% by students internalizing family-specific beliefs.
Presented at: Düsseldorf Institute for Competition Economics, Graduate Students in Economics of Education Zoom Seminars (GEEZ), The 34th Annual Conference of the European Society for Population Economics in Barcelona (ESPE), ifo Conference on Genes, Social Mobility, and Inequalities across the Life-Course, Young Economist Symposium 2021 (YES), Zeuthen Workshop on Inequality and Public Policy, European Association of Labour Economists Virtual Conference Padua 2021 (EALE), 6th IZA Workshop: The Economics of Education, UC Berkeley BEHL Lunch, UC Berkeley Psychology & Economics Seminar, Advances with Field Experiments (AFE) 2022, SITE Experimental Economics 2022, Field Experiments in Economics and Business (Heilbronn)
Selective Memory around Big Life Decisions [pdf]
Abstract: Selective memory can lead people to mistake life outcomes as what they always wanted. Using data on past fertility desires from a panel tracking fertility preferences and actual fertility for 3,936 Kenyans from their early twenties to their thirties, I provide monetary incentives to remember and to be reminded of past desires. I find that: (i) 29% of respondents have more children by their thirties than once desired; (ii) despite incentives, especially respondents with excess fertility misremember past desires in the direction of current fertility and do not want to be reminded of them, consistent with motivated memory; (iii) selective memory affects the intergenerational transmission of fertility preferences.
Presented at: UC Berkeley Development Lunch, Pacific Conference for Development Economics 2021 (PacDev), Psychology and Economics of Poverty (PEP) Convening, 25th Annual Society for Institutional and Organizational Economics (SIOE), National University of Singapore
(Media) Coverage: Roland Bénabou's 2021 Jean-Jacques Laffont Prize lecture on "Beliefs and Misbeliefs: The Economics of Wishful Thinking", video here (1:04:24 to 1:09:40)
Abstract: Fertility preferences have long played a key role in models of fertility differentials and change. We examine the stability of preferences over time using rich panel data on Kenyan women’s fertility desires, expectations, actual fertility, and recall of desires in three waves over a nine-year period, when respondents were in their 20s. We find that although desired fertility is quite unstable, most women perceive their desires to be stable. Under hypothetical future scenarios, few expect their desired fertility to increase over time but, in fact, such increases in fertility desires are common. Moreover, when asked to recall past desires, most respondents report previously wanting exactly as many children as they desire today. These patterns of bias are consistent with the emerging view that fertility desires are contextual, emotionally laden, and structured by identity.
Media Coverage: Marginal Revolution
Work in Progress
Abstract: This paper theoretically and empirically analyzes how identity (one's sense of self) affects investment decisions. First, we present a model where identity distorts individuals' beliefs about uncertain outcomes and drives preferences by imposing psychic costs on identity-incongruent actions. Then, using field experiments on soccer betting in Kenya and the UK, we experimentally vary investment incentives for future match outcomes where soccer fans are neutral, favor, or disfavor one of the teams playing. We find that soccer fans have overoptimistic (underconfident) beliefs about identity congruent (incongruent) outcomes in comparison to neutral outcomes. Finally, we estimate the model parameters using respondents' portfolio allocations while accounting for beliefs. We find that identity-distorted beliefs, fans undervalue returns from identity-incongruent outcomes by 10% to 38% relative to neutral outcomes. Consequently, people choose to over-(under) invest in identity congruent (incongruent) outcomes compared to neutral ones.
Presented at: SITE Experimental Economics 2022 (by Kwabena)