L3: Education
India recruiters for jobs w/ secondary school experiment (control villages=no recruitment). He found that in treatment villages, girls got more education (specifically english language education) and had better BMI.
"Economic Opportunities and Gender Differences in Human Capital: Experimental Evidence for India" (Jensen, 2010).
Parents think much better of their child's performance than is actual; poorer, less-educationed parents have less accurate perceptions about child's academic abilities. Providing parents with information significantly impacts their investments/better aligns them with child's achievement.
"Parents' Perceptions and Childrens' Education: Experimental Evidence from Malawi" (Dizon-Ross, 2014)
C; Tran Nguyen's research from Madagascar provides additional evidence that people tend to underestimate the returns to primary education and overestimate the returns to secondary education, on average.
According to research from Madagascar, which of the following is true? a. People underestimate returns to primary and secondary education b. People overestimate returns to primary and secondary education c. People underestimate returns to primary education and overestimate the returns to secondary education, on average d. People overestimate returns to primary as well as secondary education, on average
D; The causal effect of assignment to the scholarship group on cognitive test scores for males is 0.13 standard deviations. This can be calculated by taking the difference in means in cognitive test scores between the treatment and control groups, or 0.31-0.18=0.13. This represents the reduced form.
According to the results presented in class, what is the causal effect of assignment to the scholarship group on cognitive test scores for males in the 2008 cohort? a. 31% b. 0.31 standard deviations c. 13% d. 0.13 standard deviations
A; The causal effect of assignment to the scholarship group on ever enrolling in secondary high school for males is 36 percentage points, or the difference between the treatment and control groups as presented in column (6) in the row associated with "Ever enrolled in SHS." This represents the first stage.
According to the results presented in class, what is the causal effect of assignment to the scholarship group on ever enrolled in secondary high school for males? a. 36 percentage points b. 0.36 standard deviations c. 57 percentage points d. 0.57 standard deviations
D; According to the instrumental variables analysis presented in class, the effect of additional years of schooling on cognitive test scores for males in the 2008 cohort is 0.36 standard deviations. This is calculated by taking the reduced form estimate (0.13 standard deviations) and dividing by the first stage estimate (36% or 0.36). 0.13 standard deviations divided by 36% equals 0.36 standard deviations. This is known as the Wald estimate.
According to the results presented in class, what is the effect additional years of schooling on cognitive test scores for males in the 2008 cohort? a. 13% b. 0.13 standard deviations c. 36% d. 0.36 standard deviations
B; The graph shows a clear positive association between years of schooling and future earnings. However, we cannot say that this relationship is causal, as in A, since there could be any number of other factors that would explain why children who are more likely to stay in school longer are also more likely to have higher income in the future. In other words, when we compare outcomes for someone who has 4 years of schooling to someone who has 10 years of schooling, we could be looking at very different people. Since there is a clear relationship between the two, the most we can say just from observing this relationship is that years of schooling are positively correlated with greater future income, as in B.
As shown in the same graph above, each additional year of schooling: a. Causes children to earn higher income the future b. Is correlated with higher income in the future c. Is not related to future earnings potential
D; If the optimal level of investment in their children, S*, is less than the maximum education budget available to the family, parents will still be able to invest equally in their children, and to send them to school for the optimal number of years S*.
Assume the following: * Parents believe that the returns to education are linear * Parents are credit-constrained, that is they cannot spend more than Ĥ per child on education * The cost associated with optimal schooling (S*) is less than Ĥ per child. What will happen to the amount of schooling they choose to invest in for their children compared to the case without credit-constraints? a. Parents will select some children in whom they will invest their entire education budget, others will not be sent to school at all b. Parents will invest in all their children equally, but for fewer years than they would optimally like to c. Parents will send none of their children to school d. Parents will invest in all their children equally, for the optimal number of years, S*
Social desirability bias
Bias to get the experimenter to like your answers
B; As children become older, the opportunity cost of education increases, since the alternative to school attendance may be working in the labor force for a wage. Later years of education may also have higher direct costs. Combining these two, the total cost of education tends to increase over years of education. Conditional cash transfers are often designed so that they increase over time, as a way of offsetting these increasing costs and making it easier for families to continue to send their children to school.
Conditional cash transfers (conditioned on school attendance) are often designed to ________________________ a. Increase over time, to counteract that parents tend to value education less over time b. Increase over time, to offset direct costs and opportunity costs that are higher for later years of education c. Decrease over time, since parents believe returns to education are higher for the later years of education d. Be constant for all years of education, to prevent setting younger or older children at a disadvantage
* Ask how much they'd like to pay for a remedial textbook in English or math (and they do have to buy it if their offer clears). * Ask if they'd like a book in levels easy, medium or hard. * Secondary lottery: 1/100 children gets the chance for a school fee paid for secondary school. Each parent is given 9 tickets, and you must allocate that between your kids.
How did the Dizon Ross desirability experiment get around social desirability? 3 ways
c; Quality of education enters into the model through b. b represents the relationship between schooling and income. As quality of education increases, we would expect that b would increase as well to reflect that the same level of schooling would now translate into a higher level of income. This would increase the optimal level of schooling S*.
How does the quality of education factor in to the optimal level of schooling chosen? a. The model does not account for quality of education b. Quality of education is captured by the term m, which represents the parents' valuation of a child's future income; S* increases as m increases c. Quality of education is captured by b, which represents the relationship between schooling and income; S* increases as b increases
B;
Imagine that the cost of school as a function of years of schooling is given by: C(Si) = Si^2 If there are no financing constraints (i.e. parents can spend as much as they want on school, and if they have to borrow they can pay it back when the child earns the returns), what level of schooling will parents choose? Call this value S∗i. For this and the following questions, suppose that parents' utility of educaction is equal to the returs to education (see equation question 1). A) S∗i=a2i B) S∗i=ai/2 C) S∗i=ai−2Si D) S∗i=2∗ai
A; Utility increases up and to the left - people prefer to earn more and prefer to spend less on education.
Imagine that the marginal cost of school increases with the number of years you are in school. Which of the following sets of indifference curves represents this graphically, where the arrow indicates the direction of increasing utility?
C; In the Indonesian school construction example presented in class, the instrumental variable estimates provide a weighted average of the returns to education for a year in primary school, weighted for each year by the fraction of children moved from that year to the next. This is because the instrument, construction of primary schools, only directly affects primary school enrollment decisions. Conceptually, in order to estimate the returns to education at each specific year of education, we would need a separate instrument that affects only that year of education. In this case, the instrument affected primary schooling decisions only, through the widespread construction of primary schools in Indonesia.
In the Indonesian school construction experiment Professor Duflo describes in class, what can we learn from using primary school construction as an instrument for school enrollment? a. The returns to education for all levels of education, as long as estimates are run separately for all years of education b. The weighted average of the returns to each year of education across all levels of school c. The weighted average of the returns to each year of education in primary school only d. The returns to education for all levels of education, but only as applies to the primary school children in the sample
Indonesia constructed over 61,000 primary schools: led to an increase in education (~.15 more years) and earnings; economic returns are 6.8 to 10.6 percent. Younger people within the high intensity areas achieve on average 0.46 more years of education. There was also a trend towards increasing education, possibly because of changing preferences, increases in returns to education, or economic growth. (Effect of program overestimated.) However, we know that the program was targeted at regions that were poorer and had lower educational attainment to start. Therefore, persistent group differences cause a downward bias, and this is an underestimate of the true value of the program.
Schooling and Labor Market Consequences of School Construction Indonesia: Evidence from an Unusual Policy Experiment (Duflo 2001)
B, C; Findings from Malawi support that providing information about their child's true achievement through the use of informative report cards can lead parents to update their beliefs about their child's achievements. Furthermore, the findings support that this translates into selecting more level- appropriate materials for children.
The results from Malawi tend to support that providing information about children's true achievement: ________________________. (Check all that apply) a. Does not alter parents' perceptions about their children's achievement levels... b. Does update parents' perceptions about their children's achievement levels... c. ... and does encourage parents to select more level-appropriate materials for their children. d. ... but does not encourage parents to select more level-appropriate materials for their children.
Using more detailed variation in the instrument can improve precision because it allows for more nuanced differences in treatment intensity. Rather than lumping regions into high'' and low'' areas, it takes advantage of the full distribution of treatment intensities and the accompanying distribution of outcomes. Controlling for region and year-of-birth fixed effects absorbs any variation due to these characteristics. Although the key IV assumption is that these effects are uncorrelated with treatment status, so that IV estimation is unbiased, these effects can still add noise to the outcome. By holding these things constant, we eliminate some residual variation to focus more precisely on the difference in outcomes attributable solely to education. Similarly, the number of children in 1971 can be interpreted as a measure of the potential demand for schooling by region, and controlling for it deals with any variation is causes.
Thought exercise: Duflo improves the precision of this estimate in two ways. First, she takes advantage of the fact that there is more variation in the number of schools built than just high/low intensity. Instead, she uses the full distribution of the number of schools in her instrumental variable. Second, she controls for differences in cohort of birth, region of birth, and the number of children in the region at the time of school building. Why might each of these actions improve the precision of the result?
* Vocation * Schultz: ability to learn/decode information * Teachs values/obedience
Three classes of education
False; The above statement is false. Even for people who earn a living through agriculture, having a classroom education could prove useful. In the example given in class, a farmer who is well-educated and literate may be better able to read a fertilizer packet and fertilize his crops. He or she may also have more access to information about market pricing, how insurance and credit markets work, etc.
True or false: Many people in the developing world earn income from agriculture. For these people, the benefits of a traditional classroom education are almost surely near zero. True False
True. Many parents tend to believe that the first years of education are not useful on their own, but that returns to education are only realized when children complete many years of education, ultimately leading to a degree. One consequence of this belief is that parents may not invest in just a few years of a child's education if they do not think that child will be able to continue on to many years of education and/or complete a degree.
True or false: Parents tend to believe that returns to education are low for early years of education and high only for later years of education as a child earns a degree. True False
False; Despite initial distorted beliefs about the returns to education, Tran Nguyen found that when parents in Madagascar were informed about the returns to education, they updated their beliefs about the returns to education. This suggests that parents are responsive to information about the returns to education and that distorted beliefs about the returns to education could be addressed using informational interventions.
True or false: Providing information about the true returns to education has no impact on perceived returns to education. True False
False; False. The regression indicates that and extra year of education is associated with a 0.077 log point increase in earnings, and that this relationship is significant. However, we cannot conclude from this that education and wages are causally related, for several reasons. It could be that people with more resources have a more affluent family background and have better access to education. There could also be individual; characteristics that lead people to get more education and to be more productive in the work force (earning a higher wage). As such, we cannot interpret this relationship as causal.
True or false: This is a causal relationship. False True
B; B is correct. The table shows in the left hand panel that the treatment mean for boys for ever enrolled in senior high school is 0.927, or 93% and that the control mean for boys for ever enrolled in senior high school is 0.569, or about 57%.
Using the table provided above, how does the probability of ever enrolling in senior high school differ between boys in the treatment group (assigned to scholarship) and boys in the control group (not assigned to scholarship)? a. 0% of the control group enrolls, 93% of the treatment group enrolls, and the difference is statistically significant b. 57% of the control group enrolls, 93% of the treatment group enrolls, and the difference is statistically significant c. 32% of the control group enrolls, 70% of the treatment group enrolls, and the difference is statistically insignificant d. 0% of the control group enrolls, 70% of the treatment group enrolls, and the difference is statistically significant
All; You can imagine many reasons that parents may decide to send their children to school. All of the above, as discussed in class, might be true. To the extent that education teaches children valuable skills and knowledge, education can make children more productive and hence improve their earnings potential as adults. Educated children are more likely to be literate and aware of health practices, which may lead to better health outcomes for them and for their family. Education can also provide a better general understanding of the world, and help children to grow up to be confident and productive members of society.
What are some of the reasons that parents may decide to send their children to school? (Check all that apply) a. Education can increase future earnings potential b. Education can lead to better health outcomes c. Education provides a better overall understanding of the world
A, B, and C are all examples of possible spillovers/externalities from education. Areas with more-educated workforces may attract businesses that want to hire educated people as their employees, and hence improve industry and generate additional jobs in an area, as in A. It could be that if people in a neighborhood are better educated, they are more likely to exert pressure on the government to improve provision of goods and services, as in B. On the negative side, it could be that these gains in labor market opportunities come at the expense of less-educated people in the same area, who now find it more difficult to find a job or find that wages for their unskilled labor have been reduced, as in C.
What are some possible spillovers or externalities from education? (Check all that apply) a. Positive: Having more educated people in an area might lead to better labor market opportunities b. Positive: Having more educated people in an area might lead to more political activism and pressure on the government to develop more effective institutions c. Negative: Having more educated people in an area could crowd out less educated people, who find it more difficult to get a job d. Negative: Having more educated people in an area always reduces the wages that less-educated people can earn
33% increased probability of going to senior high school for women, 36% for men No IQ difference/women had fewer partners People thought they were entitled to more wages, more hopeful about the future, more likely to go to university
What happened in Ghana when we randomly assigned full-tuition scholarships?
B; As discussed in class, one hypothesis for the belief that returns to education are high for low levels of education and flatten out for high levels of education is that the basic concepts learned early on are the most useful in terms of enable children to earn a higher future income. In contrast, what children learn in later years tends to provide a smaller marginal benefit to future income. Note that this is just a hypothesis discussed, as there seems to be evidence that returns to education are relatively constant over years of education.
What is one hypothesis for the belief that early years of education have higher returns than later years of education? a. Young children are able to learn more effectively than older children b. What children learn in the first years of education (for example, how to read) is more helpful than what children learn in later years c. Primary school teachers tend to be more effective and skilled than secondary school teachers d. Primary school is universally available to all, while secondary school requires an entrance exam to qualify
A, B, C; Each of A, B, and C could explain other factors that drive the observed relationship between schooling and future earnings potential. This is known as "selection bias," since to some extent, children with different preferences and abilities self-select (or have their parents select on behalf of them) into a certain number of years of education.
What other factors could be driving the observed relationship between additional years of schooling and earning potential? (Check all that apply) a. Children who are more motivated or driven stay in school longer, and these same children are the ones that would earn more in the future anyways b. Children with rich parents can afford to stay in school longer, and these are the same children that would earn more in the future anyways c. Smart children stay in school longer, and these are the same children that would earn more in the future anyways
B; If parents start to value their child's future earnings more, we would expect the optimal level of schooling chosen for children to increase. This makes intuitive sense, since the model is set up such that parents derive utility from education to the extent that in increases a child's future earnings, and since future earnings increase with years of education. In the optimization problem, mechanically we can see that since S* is positively related to m, as m increase, so does S*.
What would we expect to happen to the optimal level of schooling chosen for children if how much parents value children's future income (m) increases? a. Optimal schooling chosen would decrease b. Optimal schooling chosen would increase c. Optimal schooling chosen would be unaffected d. Cannot determine with the information given
Incarceration effect
What's the effect when school keeps people from having children (women have fewer partners, boys are more likely to use contraception)
each year of primary education would increase a child's income by 6 percent, each year of junior high education by 12 percent, and each year of senior secondary education by 20 percent
What's the perception of returns to education in Madagascar?
All; All of the above are reasons that the costs of education might increase with years of education.
Which of the following are reasons that the cost of education may increase with years of education? (Check all that apply) a. Older children have a higher opportunity cost due to their ability to work b. It may be more costly to teach more advanced subjects and/or older students c. Governments are more likely to subsidize lower levels of education than higher levels of education
C; Social desirability bias refers to bias that can occur at the stage of data collection. The refers to the biases that could be introduced if interview or survey respondents answer questions so as to respond with what they think the interviewer or surveyor would like to hear, rather than what may be the truth or the most accurate answer.
Which of the following describes social desirability bias? a. Education decisions are most influenced by societal norms, not based on accurate perceptions of the costs and returns to education b. Parents tend to educate their children for the minimally socially acceptable number of years, but no more than that c. If you ask parents about the education decisions they make for their children, they are likely to tell you what they think you want to hear d. If you ask parents about the education decisions they make for their children, they are likely to tell you what they think the other parents are also answering
C, not A. C is correct. To find the optimal level of schooling within our model, we must solve the parent's utility maximization problem with respect to schooling. This requires setting the derivative of future income with respect to schooling equal to the derivative of costs of schooling, and solving for schooling S*.
Which of the following describes the process for deriving the model solution for the parent's utility maximization problem, according to the model discussed in class? a. Maximize the child's earnings with respect to years of schooling, solve for optimal schooling S* b. Minimize the cost of education, subject to setting years of schooling to be at least a certain number of years, solve for optimal schooling S* c. Set the first derivative of parents' benefits obtained from future income equal to the first derivative of cost of schooling, solve for optimal schooling S* d. Gradually increase schooling until costs of schooling increase too high, solve for optimal schooling S*
D; If the costs of education are convex over years of education, this means that the costs of education increase with more years of education. h(S) would slope upwards at an increasing rate, and marginal costs (the derivative of total costs) would be positive and slope upwards.
Which of the following is consistent with how we would expect the costs of education h(S) and marginal cost of education h'(S) to look over years if costs of education are convex?
B; B is correct. The term "Sheepskin" refers to the fact that sometimes having completed a certain level of education enables someone to earn more in the labor market than they would have otherwise, independent of any actual gain in skills or knowledge. For example, you could imagine two people, Arjun and Vipin, who have both completed 9 years of education and have identical skills and knowledge. If during that time Arjun has completed secondary school but Vipin has not, and if Arjun is as a result able to get a higher-paying job, then we would say Arjun benefits from the "sheepskin effect."
Which of the following is meant by the "sheepskin" effect in the context of education? a. Sheepskin" refers to the fact that having completed a certain level of education necessarily provides a certain level of skills and knowledge, which enables someone to earn a higher wage b. "Sheepskin" refers to the pure signaling effect of education, where aside from any knowledge or skills learned, having completed a certain level of education enables someone to earn a higher wage c. "Sheepskin" refers to the marginal gain in productivity from an additional year of education d. "Sheepskin" refers to the marginal gain in wage from an additional year of education
B, C; If the scholarship treatment was not randomly assigned, the scholarship treatment would not be a valid instrument, as in B. This is because whatever characteristics went into the selection of scholarship winners could be linked to school attendance decisions and cognitive test scores. By randomly assigning the scholarship, the researchers ensure that the groups of children assigned to the treatment and control groups are similar on average on each of these characteristics. If scholarship winners were given a study guide that was not made available to non-scholarship winners, as in C, then we would expect the scholarship to have a direct impact on cognitive test scores, which would violate the exclusion restriction. If some students who win the scholarship nevertheless choose not to attend school, as in A, the instrument would still be valid. We will always compare all those who were selected by random assignment in both the treatment and control groups, regardless of their choices. If all scholarship winners were given a stipend to cover transportation to and from school, as in D, the instrument would still be valid. This would equate to an increase in the value of the overall scholarship, but would not cause the scholarship to directly impact test scores.
Which of the following would make assignment to the scholarship an invalid instrument? (Check all that apply) a. Some scholarship winners chose not to take advantage of the scholarship, and did not attend school b. The scholarship was not randomly assigned c. The scholarship came along with a study guide only available to scholarship winners, and this study guide gave them an advantage in the test compared to non-scholarship winning classmates d. All scholarship winners were also given a stipend to cover transportation to and from school
All; As discussed in class, all of the above were other impacts found as a result of the Ghana scholarship experiment. These provide strong support for some of the hypotheses we discussed at the start of the unit for why parents might want to send their children to school.
Which of the other additional outcomes are observed from the scholarship education program? (Check all that apply) a. Significant reduction in pregnancy among girls b. Significant reduction in unwanted pregnancies among girls c. For both girls and boys, more likely to want to go to university d. Increased expectations of what they will earn in their life, among boys
A, B, D; Each of A, B, and D are limitations of the simple model presented in class to be aware of. The model presented in equation (1) assumes that parents derive utility from a child's education only through increases in future income. However, there could be other reasons that parents derive utility from their child having additional years of education that are not included here. Similarly, the model presented in class takes the point of view of the parents, who typically make education decisions on behalf the children. The model presented in class does not take into consideration that children might have different preferences for education and future income than their parents do. Finally, returns to education as presented in equation (2) are assumed to be linear in log form across years of education, which may obscure any differential impacts of different years of schooling on income. This will be discussed more in future lectures. C is incorrect, as the term h(S) captures the cost of education.
In the schooling decisions model presented in class, what are some of the limitations of the parent's utility function expressed as a function of their child's income? (Check all that apply) a. Does not include benefits of education, aside from increases in future income b. Does not factor in the child's utility and preferences related to education and future income c. Costs of education are not included d. Returns to education are assumed to be linear in log for all years of education, which may not be accurate
A, B, and D are all ways in which schooling might impact fertility choices. As in A, schooling tends to delay marriage and childbearing. As in B, additional schooling can increase the opportunity cost of getting married early, particularly for girls. To the extent that education increases earnings potential, it could become relatively more attractive to work in the labor market for some time before starting a family, as opposed to starting a family early on. Additional education may change family size preferences, as well as provide future parents with the information they need to act on family planning decision, as in D. While some schools could provide family planning supplies free of charge, as in C, this is not true across the board.
In what ways could schooling impact fertility choices? (Check all that apply) a. When children are in school, they are less likely to get married and start a family early b. With higher education, the opportunity cost of getting married and starting a family early increases c. Starting in secondary school, family planning supplies are distributed free of charge through schools d. Education may directly impact family size preferences as well as provide young people with the information they need to have their preferred family size
All; There are many ways that additional education might benefit girls differentially than boys. All of the above are true. As girls become more educated, their earning potential increases, which could ultimately increase their intra-household bargaining power, as we will discuss more in the unit on gender in the family. A more educated girl might be able to make better choices around nutrition, health, and education, and hence better able to raise a more healthy and productive family when she becomes a mother (in this way, investing in future generations). Both this and her better earning capacity in the labor market could improve her standing in the marriage market. In countries with dowries, it could reduce the dowry. In countries with bride price it could increase the bride price.
In which ways might additional education benefit girls specifically? (Check all that apply) a. Improving how much they can earn in the labor market b. Improving standing in the marriage market c. Increasing future bargaining power within the household d. Better educated girl children may have more educated and healthier children when they become mothers
Parents are sensitive to returns to education Parents who initially overestimated returns invest less: higher absence and lower test scores at the end of the year. Parents who initially understimated returns invest more: lower absence and higher test scores at the end of the year.
Information, Role Models and Perceived Returns to Education: Experimental Evidence from Madagascar" (Nguyen, 2008)
B; In the presence of a binding credit constraint, parents will not be able to educate their children for as many years as they would like. Assuming that returns to education are linear, parents would still invest in each child equally, but would invest less and be able to afford fewer years than would be optimal according to their utility maximization problem. This is because the cost of educations are convex, so if they did anything different, they could get more "bang for the buck" by reallocating some of the money from the child they are educating the most to a child they are educating less (and therefore has a lower marginal cost).
Now assume the following: * Parents believe that the returns to education are linear * Parents are credit-constrained, that is, they cannot spend more than Ĥ per child on education * The cost associated with optimal schooling (S*) is more than Ĥ per child. What will happen to the amount of schooling they choose to invest in for their children compared to the case without credit-constraints? a. Parents will select some children in whom they will invest their entire education budget, others will not be sent to school at all b. Parents will invest in all their children equally, but for fewer years than they would optimally like to c. Parents will send none of their children to school d. Parents will invest in all their children equally, for the optimal number of years, S*
first stage relationship (schooling on test scores) / reduced form (scholarship on participation)
Say the scholarship is an instrumental variable. What's the first stage? Reduced form?
C; If parents believe that the benefits of education are zero up until a certain threshold level Ŝ, and they cannot afford to send even one child to school at that cost they will not send any children to school and will not invest in any education for their children (even though they have a budget to send children to school for at least some small number of years). This describes the case where credit-constraints combined with distorted beliefs about the returns to education can lead to a poverty trap.
Now assume the following: * Parents believe that the returns to education are non-linear, specifically that returns to education are zero up until a certain point Ŝ, and then increasing with years of education thereafter * They have two children * "Parents are credit-constrained, that is, they cannot spend more than Ĥ*2 on education" * The cost associated with optimal schooling (S*) is more than Ĥ*2 per child * The cost associated with Ŝ is more than Ĥ and less than Ĥ*2 * The cost associated with S* is more than Ĥ*2 What may happen to the amount of schooling they choose to invest in for their children compared to the case without credit-constraints? a. Parents will select one child in whom they will invest their entire education budget, the other will not be sent to school at all b. Parents will invest in both children equally, but for fewer years than they would optimally like to c. Parents will send neither child to school d. Parents will invest in both children equally, for the optimal number of years, S*
A, B; This describes the situation where parents do not believe that just a handful of years would be valuable for their children, and that the only benefits to education occur when they can afford to send their child to school for many years, for example, to earn a degree. If they cannot afford to send both their children to school, they may select one to send to school for some number of years, and will not send the other to school at all.
Now assume the following: Parents believe that the returns to education are non-linear, specifically that returns to education are zero up until a certain point Ŝ, and then increasing with years of education thereafter * They have two children * "Parents are credit-constrained, that is, they cannot spend more than Ĥ*2 on education" * The cost associated with optimal schooling (S*) is more than Ĥ*2 per child * The cost associated with Ŝ is more than Ĥ and less than Ĥ*2 * S* is greater than Ŝ Assume that parents are maximizing the sum of their children's net returns to schooling. What may happen to the amount of schooling they choose to invest in for their children compared to the case without credit-constraints? a. Parents will select one child in whom they will invest their entire education budget, the other will not be sent to school at all b. Parents will invest in both children equally, but for fewer years than they would optimally like to c. Parents will send neither child to school d. Parents will invest in both children equally, for the optimal number of years, S*
All; Each of the above are reasons why asking these questions directly may lead to biased or inaccurate answers. On the one hand, parents may answer questions in a way that they think will impress or please the interviewer, as in B and C. On the other hand, if the questions are abstract/hypothetical and there are no consequences based on the answer given, parents may not think very hard about them, and may not take the questions seriously. By having something be at stake in the parents answer - either having to pay for a remedial textbook based on the outcome of a coin toss, or having to live with a selected level of workbook that their child can use - the creative methods of data collection discussed in class help to elicit more accurate beliefs.
Professor Duflo introduces several creative ways employed by Rebecca Dizon-Ross in her research in Malawi to elicit parents' beliefs about children's performance and parents' willingness to invest in their children's education. Why might asking these questions directly provide inaccurate answers? (Check all that apply) a. Respondents may not accurately answer questions related to willingness to pay if they do not actually have to pay anything based on their answers b. Respondents may overstate their willingness to pay for education to impress or please the interviewer c. Respondents may overstate their perceived child's achievement to impress or please the interviewer d. Respondents may not accurately answer questions related to their child's achievement if there is nothing at stake; providing a textbook at the perceived appropriate level ensures that parents have something at stake by answering accurately
B; Robert Jensen finds that in response to recruitment drives for back office processing jobs, girls get more education and other outcomes such as improved BMI. Additionally, Jensen finds that girls tend to specifically increase their English language education, which suggests that that they were adjusting to become better-suited to the back office processing jobs. This provides evidence that people do tend to respond to labor market conditions and future earning potential when making education decisions.
Robert Jensen finds evidence from North India that recruitment drives ___________ education among girls, which provides evidence that __________________. a. decrease; improving job opportunities causes many people to respond by dropping out of school and take a job instead of completing their education b. increases; improving job opportunities that require education encourages people to respond by increasing their level of education c. does not impact; people do not adjust education decision based on a perceived change in the benefits of education d. does not impact; people do not believe that adjusting their level of education will make them more or less likely to get a job
A; The coefficient on education is 0.077, and the standard error is 0.0007. The relationship is significant at the 5% level, so D is correct. Load the data into R (remember the setwd() and data <- read.csv() commands), the use the following code to regress log monthly earnings on education:
Run a regression of log monthly earnings on education. What is the estimated impact of an extra year of education on log monthly earnings? A. 0.077, significant at the 5% level B. 2.72, significant at the 5% level C. 0.7, not significant at the 5% level D. 11.40, significant at the 5% level
A, D: Providing some students with a scholarship, or with encouragement to attend school, as in A and D, are examples of interventions that could increase years of schooling attained but likely would not impact future income. Providing some students with career search help and mentoring, as in B, may encourage students to attend school for a longer period of time. However, we could also expect such a program to directly improve job market opportunities and lead to higher incomes for young people, since it may help to place them in the best opportunities with the greatest earning potential. Similarly, providing after-school tutoring to some students may encourage these students to stay in school for a longer period of time, but might also directly impact income by increasing knowledge and skills independent of in-school instruction. As such, these last two examples would not be the right interventions for isolating the relationship between years of schooling and future income.
Since we cannot randomly assign education or years of schooling, Professor Duflo introduces the idea of implementing a program that might lead a child to gain more schooling, but would not otherwise lead to higher future income on its own. Variance in assignment to such a program could then be used to measure the returns to education. Which of the following would be examples of such an intervention? (Check all that apply) a. Providing a randomly-selected sample of students with a scholarship b. Providing a randomly-selected sample of students with career search help and mentoring c. Providing a randomly-selected sample of students with additional after-school tutoring d. Providing a randomly-selected sample of students with encouragement from recent graduates and other well-known mentors in the community
False; False, assignment to a treatment school is NOT a valid instrument for actually taking the deworming medication, in this case. This is because there could be (indeed there very likely are) positive spillovers from those who take deworming medication and those who do not, but are surrounded by others in their school who take deworming medication. If you used assignment to a treatment school as an instrument, and calculated the Wald estimate by dividing the impact of treatment on a certain outcome by the impact of assignment to treatment on taking deworming medication, you would end up with a biased overestimate of the impact of deworming on that outcome.
Suppose schools are randomly assigned to receive or not receive deworming medication. (Randomization is done at the school, rather than the classroom or individual level.) Suppose a researcher would like to get the effect of actually receiving the deworming medication, but that not all children assigned to the treatment actually received deworming medication. True or false: being in a treatment school is a valid instrument for actually receiving deworming medication. a. True b. False
False; This is false. Even if one child has higher returns to education than another, if parents believe that returns to education are linear, then they should educate both children for at least some number of years. As Professor Duflo discusses in class, under linear returns to education (and some available budget to spend on education), no child's optimal level of schooling would be zero years. What would likely happen in this family is that Neel will be educated for more years than Rajkumar. The key here is to realize that though returns are linear, costs of schooling is convex. Think of C(Si)=S2i for example. At higher levels of schooling, the marginal cost of schooling is much higher, so there is some value in educating Rajkumar.
Suppose that a set of parents have two children, Neel and Rajkumar. Suppose further, that the parents DO believe that returns to education are linear, but that the returns to education are higher for Neel than for Rajkumar at all levels of education, as shown in the graph above. True or false: If the parents cannot afford to educate both children fully, they should spend their entire education budget sending Neel to school and will not educate Rajkumar for any number of years. a. True b. False
A; A person i's earnings yi is the product of their ability ai and their years of schooling Si. The blue line marked "A" represents the actual returns to schooling based on the relationship given in the equation above.
Suppose that the returns to education are given by y_i = a_i * S_i Which of the following lines represents the returns to schooling, where returns are on the Y-axis and years of schooling are on the X-axis for any given ability ai?
Percieved returns affect schooling decisions and are inaccurate in the Dominican Republic. Students at randomly selected schools given information on the higher measured returns completed on average 0.20-0.35 more years of school over the next four years than those who were not.
The (Perceived) Returns to Education and the Demand for Schooling; Jensen "Economic Opportunities and Gender Differences in Human Capital: Experimental Evidence for India" (Jensen, 2010).
C, D; The graph above shows the gap between believed and actual achievement of children in the sample in Malawi. The graph shows that somewhere between 75% and 90% (corresponding to the distribution crossing believed-actual score=0 somewhere between the 10th and 25th percentile) of parents overestimate their children's scores.
The graph above shows believed versus actual achievement. According to the graph, between __________ of parents overestimate their children's achievement. a. somewhere between 10% and 25% b. about 50% c. about 80% d. somewhere between 75% and 90%
B; The graph above is of the form ln(y)=βx+ε (where ε represents the error term). The mathematical interpretation of the slope β is it represents the proportional change in income associated with a one-year increase in schooling attainment. To see this, differentiate the equation with respect to x 1ydydx=β Discretizing the derivatives, you can see that when dx=1, β=Δyy
The graph above shows years of schooling on the x-axis and log income on the y-axis. Call the slope of this line β. How do we interpret the slope of this log-linear relationship? a. The slope at any given point represents the difference in dollars of income associated with a 1-year change in schooling b. The slope at any given point represents the proportional increase in income associated with a 1-year increase in schooling c. The slope at any given point show the impact of a one percent change in years of schooling on dollars of income d. The slope at any given point show the impact of a one percent change in years of schooling on percent change in income
