The Role of Risk and Ambiguity Preferences on Early-Childhood Investment: Evidence from Rural India
Michael Cuna, Lenka Fiala, Min Sok Lee, John A. List, and Sutanuka Roy
2025
Understanding the role of preferences, beliefs, and constraints on social and wealth inequities is a key unlock for economic growth. This study focuses on the inter-relationship between risk and ambiguity preferences of mothers, their early childhood investments, and their children’s outcomes. To do so, we elicit ambiguity attitude and risk aversion preference parameters from more than 6000 randomly sampled mothers from nearly 500 villages in Rajasthan, India. Across several measures of mothers’ investment in nutrition of their children between the ages of 0-6, we find a robust and stable positive correlation of estimated ambiguity attitude and risk aversion parameters with maternal investments: the more risk and ambiguity averse the mother, the greater her investments. Such investments are correlated with better children’s cognitive and non-cognitive skills, as mothers with greater risk and ambiguity aversion have children with superior skills, even after accounting for socio-economic differences. Importantly, the positive effect of ambiguity and risk aversion on early-life outcomes can attenuate the negative impact of proxies of socio-economic disadvantage, such as illiteracy of the mothers, belonging to historically discriminated social groups, no exposure to radio, television, or zero access to mobile phones for all measures of cognitive and non-cognitive early-life skills.
Here Today, Gone Tomorrow? Toward an Understanding of Fade-out in Early Childhood Education Programs
John A. List and Haruka Uchida
2024
An unsettling stylized fact is that decorated early childhood education programs improve cognitive skills in the short-term, but lose their efficacy after a few years. We implement a field experiment with two stages of randomization to explore the underpinnings of the fade-out effect. We first randomly assign preschool access to children, and then partner with the local school district to randomly assign the same children to classmates throughout elementary school. We find that the fade-out effect is critically-linked to the share of classroom peers assigned to preschool access—with enough treated peers the classic fade-out effect is muted. Our results highlight a paradoxical insight: while the fade-out effect has been viewed as a devastating critique of early childhood programs, our results highlight that fade-out is a key rationale for providing early education to all children. This is because human capital accumulation is inherently a social activity, leading early education programs to deliver their largest benefits at scale when everyone receives such programs.
Measuring racial educational disparities over time amongst top achievers
Uditi Karna, Min Sok Lee, John A. List, Andrew Simon, and Haruka Uchida
2024
Educational disparities remain a key contributor to increasing social and wealth inequalities. To address this, researchers and policymakers have focused on average differences between racial groups or differences among students who are falling behind. This focus potentially leads to educational triage, diverting resources away from high-achieving students, including those from racial minorities. Here we focus on the ‘racial excellence gap’—the difference in the likelihood that students from racial minorities (Black and Hispanic) reach the highest levels of academic achievement compared with their non-minority (white and Asian) peers. There is a shortage of evidence that systematically measures the magnitude of the excellence gap and how it evolves. Using longitudinal, statewide, administrative data, we document eight facts regarding the excellence gap from third grade (typically ages 8–9) to high school (typically ages 14–18), link the stability of excellence gaps and student backgrounds, and assess the efficacy of public policies. We show that excellence gaps in maths and reading are evident by the third grade and grow slightly over time, especially for female students. About one third of the gap is explained by a student’s socioeconomic status, and about one tenth is explained by the school environment. Top-achieving racial minority students are also less likely to persist in excellence as they progress through school. Moreover, state accountability policies that direct additional resources to reduce non-race-based inequality had minimal effects on the racial excellence gaps. Documenting these patterns is an important step towards eliminating excellence gaps and removing the ‘racial glass ceiling’.
Enhancing the Efficacy of Teacher Incentives through Framing: A Field Experiment
Roland G. Fryer, Jr., Steven D. Levitt, John List, and Sally Sadoff
American Economic Journal: Economic Policy 2022, 14(4): 269–299
In a field experiment, we provide financial incentives to teachers framed either as gains, received at the end of the year, or as losses,in which teachers receive up-front bonuses that must be paid back if their students do not improve sufficiently. Pooling two waves of the experiment, loss-framed incentives improve math achievement by an estimated 0.124 standard deviations (σ), with large effects in the first wave and no effects in the second wave. Effects for gain-framed incentives are smaller and not statistically significant, approximately 0.051σ. We find suggestive evidence that the effects on teacher value added persist posttreatment.
The Impact of Team Incentives on Performance in Graduate School: Evidence from Two Pilot RCTs
John A. List and Rohen Shah
NBER Working Paper No. 30374 (2022)
Through a series of field experiments involving thousands of primary and secondary school students, we explore the power of behavioral economics to influence the level of effort exerted by students in a low stakes testing environ- ment. Several insights emerge. First, we find a substantial impact on test scores from both financial and non-financial incentives when the rewards are delivered immediately. Second, we find suggestive evidence that rewards framed as losses outperform those framed as gains. Third, we find that non-financial incentives can be considerably more cost-effective than financial incentives for younger students, but are less effective with older students. Finally, and perhaps most importantly all motivating power of the incentives vanishes when rewards are handed out with a delay. Since the rewards to educational investment virtually always come with a delay, our results suggest that the current set of incentives may lead to underinvestment.
The Behavioralist Goes to School: Leveraging Behavioral dEconomics to Improve Educational Performance
American Economic Journal: Economic Policy, forthcoming
Research on behavioral economics has established the importance of factors such as reference dependent preferences, hyperbolic discounting, and the value placed on non-financial rewards. To date, these insights have had little impact on the way the educational system operates. Through a series of field experiments involving thousands of primary and secondary school students, we demonstrate the power of behavioral economics to influence educational performance. Several insights emerge. First, we find substantial incentive effects from both financial and non-financial incentives on test scores. Second, we find that non-financial incentives are considerably more cost-effective than financial incentives for younger students, but were less effective with older students. Third, and perhaps most importantly, consistent with hyperbolic discounting, all motivating power of the incentives vanishes when rewards are handed out with a delay. Since the rewards to educational investment virtually always come with a delay, our results suggest that the current set of incentives may lead to underinvestment. Fourth, in stark contrast to previous laboratory experiments, we do not see an increased response of effort when rewards are framed as losses. Our findings imply that in the absence of immediate incentives, many students put forth low effort on standardized tests, which may create biases in measures of student ability, teacher value added, school quality, and achievement gaps.
Parental Incentives and Early Childhood Achievement: A Field Experiment in Chicago Heights
NBER Working Paper No. 21477
This article describes a randomized field experiment in which parents were provided financial incentives to engage in behaviors designed to increase early childhood cognitive and executive function skills through a parent academy. Parents were rewarded for attendance at early childhood sessions, completing homework assignments with their children, and for their child’s demonstration of mastery on interim assessments. This intervention had large and statistically significant positive impacts on both cognitive and non-cognitive test scores of Hispanics and Whites, but no impact on Blacks. These differential outcomes across races are not attributable to differences in observable characteristics (e.g. family size, mother’s age, mother’s education) or to the intensity of engagement with the program. Children with above median (pre-treatment) non cognitive scores accrue the most benefits from treatment.
How Experiments with Children Inform Economics
John A. List, Ragan Petrie, and Anya Samek
NBER Working Paper No. 28825 (2021)
In the past several decades the experimental method has lent deep insights into economics. One perhaps surprising area that has contributed is the experimental study of children, where advances as varied as the evolution of human behaviors that shape markets and institutions, to how early life influences shape later life outcomes, have been explored. We first develop a framework for economic preference measurement that provides a lens into how to interpret data from experiments with children. Next, we survey work that provides general empirical insights within our framework. Finally, we provide 10 tips for pulling off experiments with children, including factors such as taking into account child competencies, causal identification, and logistical issues related to recruitment and implementation. We envision the experimental study of children as a high growth research area in the coming decades as social scientists begin to more fully appreciate that children are active participants in markets who (might) respond predictably to
economic incentives.
It All Starts with Beliefs: Addressing the Roots of Educational Inequities by Shifting Parental Beliefs
John A. List, Julie Pernaudet & Dana Suskind
NBER Working Paper No. 29394 (2021)
Socioeconomic inequalities in child development crystallize at early stages, with associated disparities in parental investment in children. A key to understanding the data patterns is to document the sources underlying the observed inequalities. We first show that there are dramatic differences in parental beliefs across socioeconomic backgrounds (SES), with parents of higher SES being more likely to believe that parental investments impact child development. We then use two field experiments targeted to low-SES families to explore the mutability of such beliefs and their link to parental investments. In both cases, we find that parental beliefs about child development are malleable. The less intensive version of the program based on educational videos changes parental beliefs, but fails to lastingly increase parental investments and child outcomes. By contrast, in the more intensive version of our program combining home visits and feedback, the augmented beliefs are associated with enriched parent-child interactions and improved vocabulary, math, and social-emotional skills for the children. Together, these results suggest that changing parental beliefs can be an important pathway to raising parental investments and reducing socioeconomic gaps in children’s skills, but that simple informational policies may not be sufficient.
Introducing CogX: A New Preschool Education Program Combining Parent and Child Interventions
Roland G. Fryer Jr, Steven D. Levitt, John A. List, and Anya Samek
NBER Working Paper No. 27913 (2020)
We present the results of a novel early childhood intervention in which disadvantaged 3-4-year- old children were randomized to receive a new preschool and parent education program focused on cognitive and non-cognitive skills (CogX) or to a control group that did not receive preschool education. In addition to a typical academic year (9 month) program, we also evaluated a shortened summer version of the program (2 months) in which children were treated immediately prior to the start of Kindergarten. Both programs, including the shortened version, significantly improved cognitive test scores by about one quarter of a standard deviation relative to the control group at the end of the year. The shortened version of the program was equally as effective as the academic- year program because most of the gains in the academic-year program occurred within the first few months.
The Social Side of Early Human Capital Formation: Using a Field Experiment to Estimate the Causal Impact of Neighborhoods
John A. List, Fatemeh Momeni, and Yves Zenou
NBER Working Paper No. 28283 (2020)
The behavioral revolution within economics has been largely driven by psychological insights, with the sister sciences playing a lesser role. This study leverages insights from sociology to explore the role of neighborhoods on human capital formation at an early age. We do so by estimating the spillover effects from a large-scale early childhood intervention on the educational attainment of over 2,000 disadvantaged children in the United States. We document large spillover effects on both treatment and control children who live near treated children. Interestingly, the spillover effects are localized, decreasing with the spatial distance to treated neighbors. Perhaps our most novel insight is the underlying mechanisms at work: the spillover effect on non-cognitive scores operate through the child’s social network while parental investment is an important channel through which cognitive spillover effects operate. Overall, our results reveal the importance of public programs and neighborhoods on human capital formation at an early age, highlighting that human capital accumulation is fundamentally a social activity.
Detecting Drivers of Behavior at an Early Age: Evidence from a Longitudinal Field Experiment
Marco Castillo, John A. List, Ragan Petrie, and Anya Samek
NBER Working Paper No. 28288 (2020)
We use field experiments with nearly 900 children to investigate how skills developed at ages 3-5 drive later-life outcomes. We find that skills map onto three distinct factors – cognitive skills, executive functions, and economic preferences. Returning to the children up to 7 years later, we find that executive functions, but not cognitive skills, predict the likelihood of receiving disciplinary referrals. Economic preferences have an independent effect: children who displayed impatience at ages 3-5 were more likely to receive disciplinary referrals. Random assignment to a parenting program reduced disciplinary referrals. This effect was not mediated by skills or preferences.
Disentangling Motivation and Study Productivity as Drivers of Adolescent Human Capital Formation: Evidence from a Field Experiment and Structural Analysis
Christopher Cotton, Brent R. Hickman, John A. List, Joseph Price, and Sutanuka Roy
NBER Working Paper No. 27995 (2020)
We estimate a structural model of endogenous short-run human capital investment focusing on a learner’s leisure-study choices, influenced by external costs/benefits and two key internal factors: learning productivity and willingness to engage in study activity. Our novel self-investment framework rigorously quantifies models of learning that have existed in the psychology literature for decades. Our identification strategy combines panel data and study-incentive variation to point identify student-level parameters. Empirically, we find that idiosyncratic productivity and motivation traits are uncorrelated, and that low productivity is the stronger predictor of academic struggles, not low motivation. We investigate the influence of external factors on student learning and find that school quality affects it through 3 channels: augmenting productivity, augmenting skill production TFP, and by altering the mapping between learning activity and permanent skill gains.
Toward an Understanding of the Development of Time Preferences: Evidence from Field Experiments
James Andreoni, Michael A. Kuhn, John A. List, Anya Samek, Kevin Sokal, and Charles Sprenger
NBER Working Paper No. 25590 (2019)
Time preferences have been correlated with a range of life outcomes, yet little is known about their early development. We conduct a field experiment to elicit time preferences of over 1,200 children ages 3-12, who make several intertemporal decisions. To shed light on how such primitives form, we explore various channels that might affect time preferences, from background characteristics to the causal impact of an early schooling program that we developed and operated. Our results suggest that time preferences evolve substantially during this period, with younger children displaying more impatience than older children. We also find a strong association with race: black children, relative to white or Hispanic children, are more impatient. Finally, assignment to different schooling opportunities is not significantly associated with child time preferences.
Risk Preferences of Children and Adolescents in Relation to Gender, Cognitive Skills, Soft Skills, and Executive Functions
James Andreoni, Amalia Di Girolamo, John A. List, Claire Mackevicius, and Anya Samek
NBER Working Paper No. 25723 (2019)
We conduct experiments eliciting risk preferences with over 1,400 children and adolescents aged 3-15 years old. We complement our data with an assessment of cognitive and executive function skills. First, we find that adolescent girls display significantly greater risk aversion than adolescent boys. This pattern is not observed among young children, suggesting that the gender gap in risk preferences emerges in early adolescence. Second, we find that at all ages in our study, cognitive skills (specifically math ability) are positively associated with risk taking. Executive functions among children, and soft skills among adolescents, are negatively associated with risk taking. Third, we find that greater risk-tolerance is associated with higher likelihood of disciplinary referrals, which provides evidence that our task is equipped to measure a relevant behavioral outcome. For academics, our research provides a deeper understanding of the developmental origins of risk preferences and highlights the important role of cognitive and executive function skills to better understand the association between risk preferences and cognitive abilities over the studied age range.
Measuring Success in Education: The Role of Effort on the Test Itself
Uri Gneezy, John A. List, Jeffrey A. Livingston, Sally Sadoff, Xiangdong Qin, and Yang Xu
NBER Working Paper No. 24004 (2017)
Tests measuring and comparing educational achievement are an important policy tool. We experimentally show that offering students extrinsic incentives to put forth effort on such achievement tests has differential effects across cultures. Offering incentives to U.S. students, who generally perform poorly on assessments, improved performance substantially. In contrast, Shanghai students, who are top performers on assessments, were not affected by incentives. Our findings suggest that in the absence of extrinsic incentives, ranking countries based on low-stakes assessments is problematic because test scores reflect differences in intrinsic motivation to perform well on the test itself, and not just differences in ability.
The Effect of Early Education on Social Preferences
Alexander W. Cappelen, John A. List, Anya Samek, and Bertil Tungodden
NBER Working Paper No. 22898 (2016)
We present results from the first study to examine the causal impact of early childhood education on social preferences of children. We compare children who, at 3-4 years old, were randomized into either a full-time preschool, a parenting program with incentives, or to a control group. We returned to the same children when they reached 7-8 years old and conducted a series of incentivized experiments to elicit their social preferences. We find that early childhood education has a strong causal impact on social preferences several years after the intervention: attending preschool makes children more egalitarian in their fairness view and the parenting program enhances the importance children place on efficiency relative to fairness. Our findings highlight the importance of taking a broad perspective when designing and evaluating early childhood educational programs, and provide evidence of how differences in institutional exposure may contribute to explaining heterogeneity in social preferences in society.
The Effect of Performance-Based Incentives on Educational Achievement: Evidence from a Randomized Experiment
Steven D. Levitt, John A. List, and Sally Sadoff
NBER Working Paper No. 22107 (2016)
We test the effect of performance-based incentives on educational achievement in a low- performing school district using a randomized field experiment. High school freshmen were provided monthly financial incentives for meeting an achievement standard based on multiple measures of performance including attendance, behavior, grades and standardized test scores. Within the design, we compare the effectiveness of varying the recipient of the reward (students or parents) and the incentive structure (fixed rate or lottery). While the overall effects of the incentives are modest, the program has a large and significant impact among students on the threshold of meeting the achievement standard. These students continue to outperform their control group peers a year after the financial incentives end. However, the program effects fade in longer term follow up, highlighting the importance of longer term tracking of incentive programs.
The behavioralist as nutritionist: Leveraging behavioral economics to improve child food choice and consumption
Journal of Health Economics, (2015), 39, pp. 135-146
We leverage behavioral economics to explore new approaches to tackling child food choice and consumption. Using a field experiment with >1500 children, we report several key insights. We find that incentives have large influences: in the control, 17% of children prefer the healthy snack, whereas introduction of small incentives increases take-up of the healthy snack to ∼75%. There is some evidence that the effects continue post-treatment, consistent with a model of habit formation. We find little evidence that the framing of incentives (loss vs. gain) matters. Educational messaging alone has little effect, but we observe a combined effect of messaging and incentives: together they provide an important influence on food choice.
The Curious Relation Between Theory of Mind and Sharing in Preschool Age Children
PLoS One. 2015 Feb 6;10(2):e0117947. doi: 10.1371/journal.pone.0117947. eCollection 2015
Young children have long been known to act selfishly and gradually appear to become more generous across middle childhood. While this apparent change has been well documented, the underlying mechanisms supporting this remain unclear. The current study examined the role of early theory of mind and executive functioning in facilitating sharing in a large sample (N = 98) of preschoolers. Results reveal a curious relation between early false-belief understanding and sharing behavior. Contrary to many commonsense notions and predominant theories, competence in this ability is actually related to less sharing. Thus, the relation between developing theory of mind and sharing may not be as straightforward as it seems in preschool age children. It is precisely the children who can engage in theory of mind that decide to share less with others.
Using Field Experiments to Change the Template of How We Teach Economics
Journal of Economic Education, (2014), 45(2), pp. 81-89
In this article, the author explains why field experiments can improve what we teach and how we teach economics. Economists no longer operate as passive observers of economic phenomena. Instead, they participate actively in the research process by collecting data from field experiments to investigate the economics of everyday life. This change can be shown to students by presenting them with evidence from field experiments. Field experiments related to factor markets, behavioral economics, and discrimination are presented to explain how this approach works across different economic content. The three questions that are highlighted are the following: (1) Why do women get paid less than men in labor markets? (2) How can we use behavioral economics to motivate teachers? (3) What seven words can end third-degree price discrimination?
Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment
NBER Working Paper No. 21477
Domestic attempts to use financial incentives for teachers to increase student achievement have been ineffective. In this paper, we demonstrate that exploiting the power of loss aversion–teachers are paid in advance and asked to give back the money if their students do not improve sufficiently–increases math test scores between 0.201 (0.076) and 0.398 (0.129) standard deviations. This is equivalent to increasing teacher quality by more than one standard deviation. A second treatment arm, identical to the loss aversion treatment but implemented in the standard fashion, yields smaller and statistically insignificant results. This suggests it is loss aversion, rather than other features of the design or population sampled, that leads to the stark differences between our findings and past research.
Field Experiments in Labor Economics
Chapter 2 in Handbook of Labor Economics Volume 4a, O. Ashenfelter and D. Card (editors), Elsevier, 2011, pp104-228
We overview the use of field experiments in labor economics. We showcase studies that highlight the central advantages of this methodology, which include: (i) using economic theory to design the null and alternative hypotheses; (ii) engineering exogenous variation in real world economic environments to establish causal relations and learning about the underlying mechanisms; and (iii) engaging in primary data collection and often working closely with practitioners. To highlight the potential for field experiments to inform issues in labor economics, we organize our discussion around the individual life cycle. We therefore consider field experiments related to the accumulation of human capital, the demand and supply of labor, behavior within firms, and close with a brief discussion of the nascent literature of field experiments related to household decision-making.
Nurture affects gender differences in spatial abilities
Proceedings of the National Academy of Science, (2011), 108(36), pp. 14786-14788
Women remain significantly underrepresented in the science, engineering, and technology workforce. Some have argued that spatial ability differences, which represent the most persistent gender differences in the cognitive literature, are partly responsible for this gap. The underlying forces at work shaping the observed spatial ability differences revolve naturally around the relative roles of nature and nurture. Although these forces remain among the most hotly debated in all of the sciences, the evidence for nurture is tenuous, because it is difficult to compare gender differences among biologically similar groups with distinct nurture. In this study, we use a large-scale incentivized experiment with nearly 1,300 participants to show that the gender gap in spatial abilities, measured by time to solve a puzzle, disappears when we move from a patrilineal society to an adjoining matrilineal society. We also show that about one-third of the effect can be explained by differences in education. Given that none of our participants have experience with puzzle solving and that villagers from both societies have the same means of subsistence and shared genetic background, we argue that these results show the role of nurture in the gender gap in cognitive abilities.