Parental investment in children’s education is generally assumed to be crucial for pupil outcomes - whether in terms of time invested in helping children to complete homework or prepare for exams; moving to a different neighbourhood to secure a place at a well-performing state school; or paying for private tutoring or to attend a private school.

While availability of time and money are key to the choices that parents make, however, their beliefs about returns on different types of investments are also likely to be important in their decisions. 

So understanding how parents perceive the relative value of different investments, and how these perceptions affect investment decisions, helps us to identify the obstacles that prevent them making certain decisions - and how such obstacles could be overcome.

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In a significant contribution to this effort, a new NBER working paper by Orazio Attanasio, Teodora Boneva, and Christopher Rauh, which we feature in this month’s Centre for Education Economics (CfEE) Monthly Research Digest, presents analysis of a new dataset on parental beliefs about investments, and their actual investment decisions, in the educational process. 

The dataset is built from a survey of around 2,000 parents in England with at least one child aged 5 to 16 years, and provides us with the first nationally representative estimates of parental beliefs about returns to educational investments. 

Does money matter?

The survey presents parents with hypothetical investment scenarios that differ in three respects - the level of time invested, the level of material investment and the quality of the child’s current school - and asks them what they expect their child’s earnings to be at the age of 30 for each scenario.

Parents were asked to consider two hypothetical English families, the Smiths and the Joneses, both of whom have one child attending school. 

They were told that these families live in the same neighbourhood and are identical in all respects, such as income, parents’ educational background and their children’s prior ability, with the exception that one family’s child attends a school that has been rated “outstanding” by Ofsted and the other family’s child attends a school that has been rated as “requires improvement”.

Investment decisions

The survey presented the parents, in random order, with four different investment scenarios that vary in terms of the level of time and material investment required: (1) low time investments/low material investments; (2) low time investments/high material investments; (3) high time investments/low material investments; and (4) high time investments/high material investments. 

Parents were then also randomly allocated to different groups that varied along further dimensions: the initial level of time and money invested; the child’s initial ability level; the child’s gender; and the age when the investments are made.

Each respondent was therefore presented with eight different scenarios. For each of these, they were then asked to determine how much they expected the hypothetical child would earn at the age of 30.

Time well spent

The results indicate:

• that parents, on average, believe that attending an “outstanding” school, rather than a school that “requires improvement”, increases earnings at the age of 30 by about 10 per cent;
• that spending three more hours per week with the child increases earnings by 21 per cent, while spending £30 more per week raises earnings by 15 per cent. 

These findings strongly suggest that parents believe that whether they invest time or money in their child’s education is more important for earnings than the quality of the school the child attends.

Parents also believe that time spent helping with education is more important than money spent on education. 

However, they do believe that school quality matters, and that the effect is more pronounced for older pupils than younger ones. 

Belief in change

Importantly, perceived returns do not differ depending on the respondents’ backgrounds, suggesting that parents from different backgrounds hold similar beliefs about the relative importance of different kinds of investments. 

Interestingly, perceived returns are positively related to parents’ belief in the malleability of skills, suggesting that some parents may choose not to invest simply because they think it will not make a difference.

Finally, parental beliefs about the relative value of different investments do predict their actual investment choices, as reported by the respondents. 

What next?

Overall, the paper provides useful data for policymakers seeking to increase parental investment in education. 

For example, as respondents’ belief in the malleability of skills positively predicts perceived returns, targeted information may be able to increase investments by improving awareness of the extent to which interventions, in fact, affect pupil performance. 

Providing information about the relative effectiveness of different types of investments, which requires more research, may also be important to improve parental decision-making more generally. 

Testing such ideas through experiments would at the very least be a fruitful venue for future research to pursue.

Gabriel Heller-Sahlgren is lead economist at the Centre for Education Economics (CfEE) and editor of its Monthly Research Digest.

This blog is based on his editor’s selection for the February issue of the digest, published today. You can view, download and subscribe to receive it free of charge here. CfEE is an independent thinktank working to improve policy and practice in education through impartial economic research