Parents' Beliefs About Their Children's Academic Ability: Implications for Educational Investments

Information about children’s school performance appears to be readily available. Do frictions prevent parents, particularly low-income parents, from acting on this information when making decisions? I conduct a field experiment in Malawi to test this. I find that parents’ baseline beliefs about their children’s academic performance are inaccurate. Providing parents with clear and digestible academic performance information causes them to update their beliefs and correspondingly adjust their investments: they increase the school enrollment of their higher-performing children, decrease the enrollment of their lower-performing children, and choose educational inputs that are more closely matched to their children’s academic level. These effects demonstrate the presence of important frictions preventing the use of available information, with heterogeneity analysis suggesting the frictions are worse among the poor.