Beliefs, Parental investment and Human Capital Development

Speaker: Orazio Attanasio, UCL
Venue: LG6 and LG7 Keppel street, LSHTM
Time: 5 pm to 6:30 pm
Date: 27 April 2016

We shed light on the importance of parental subjective beliefs in explaining the heterogeneity in parental choices of investments in the development of their children. Subjective beliefs about the production function of skills in early childhood develop- ment is crucial since parents may have biased beliefs about the returns to investments, which is crucial to pin down in designing policies aimed at remediating poor investments.

To determinate the importance of parental subjective beliefs, we first show how to convert the answers to a specific set of questions into estimates of expected rates of returns on specific investment and then relate these estimates to actual parental behaviour, then we formulate and estimate a model in which parents have subjective beliefs about the technology governing the formulation of skills in early childhood development, drawing on detailed and unique data for the identification of the model from an early childhood intervention ran in Colombia, in which, home visitors paid weekly visits to randomly chosen households with the aim of promoting child cognitive and psychosocial development and improving mother-child interactions. The intervention targeted poor households with children aged 12 to 24 months at baseline and lasted 18 months.

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