Academic journal article National Institute Economic Review

Belief in a Just World and Children's Cognitive Scores

Academic journal article National Institute Economic Review

Belief in a Just World and Children's Cognitive Scores

Article excerpt

Parental beliefs are recognised by psychologists as an important causal influence on child development. A two-period model of human capital accumulation in the framework of Becker and Tomes (1986) is presented. In the first period parents transfer their beliefs, distinct from genes, to children by signalling their 'belief in a just world' or their perceived return to effort. Children respond by choosing effort, irrespective of the real world returns, which combines with their genes to create early ability. This determines the rate of return to second-period investment and final attainment. If parents are credit constrained, both beliefs and income determine attainment. Empirical analysis using the second generation of the NCDS shows that beliefs are a strong predictor of early attainment and significantly reduce the importance of parental income. The identifying assumption is that parent beliefs are slow-moving and not conditioned on the child.

Keywords: Family culture; beliefs; child development; credit constraints

JEL Classifications: D13; J12; J13; Z10; Z13

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A positive association between family income and children's success in education has long been recognised in countries with different education systems. Becker and Tomes' (1986) canonical model of the family shows that parents who are 'rich enough and altruistic enough', or who can borrow on behalf of their children, invest in their children's education until the altruism discounted rate of return on the investment falls to the riskless interest rate. (1) But human capital is a poor asset to use as collateral, and markets do not exist for borrowing against children's future earnings. This market incompleteness, or credit constraint, is the dominant explanation for this correlation and has been very influential on public policy.

In an important paper, Carneiro and Heckman (2002) challenge this view, comparing US college attainment of children from families across income quartiles and after taking account of test scores at 11 years of age and family background. They find that there is at most an 8 per cent difference in enrolment rates between children from the highest and lowest family incomes. They propose an alternative hypothesis, that family background, such as parental education, influences children's early test scores and in turn later attainment. These characteristics are also correlated with later income at the time their children's attainment is measured. Yet, this begs the question of why differences in early test scores between children from families in different income brackets emerge in the first place. (2)

In a major inter-disciplinary review of early childhood development (ECD), the US National Research Council and Institute of Medicine state that the "influence of [family] culture on the rearing of children is fundamental and encompasses values, aspirations, expectations and practices" and yet "the empirical literature in this area is underdeveloped [and the] imperative for extensive research is clear." (3) This paper addresses this underdevelopment. It presents a model which incorporates family culture into the Becker and Tomes economic model of the family. It also includes estimates of the importance of parental beliefs on early childhood test scores using the second generation of the National Childhood Development Survey (NCDS).

While concepts such as culture and beliefs are ubiquitous, using them to explain economic outcomes requires identifying a causal mechanism and also formulating refutable hypotheses to test with data. Roland et al. (2004) considers "what is called culture, including values, beliefs, and social norms, can be classified as a slow-moving institution", which Becker (1996) concurs with "because of the difficulty in changing culture and its low depreciation rate, culture is largely 'given' to individuals throughout their lifetime." (4) This view of family culture, in particular beliefs, as slow-moving and not conditioned on the performance of the child is the identifying assumption in this paper. …

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