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  4. April 2023
  5. Why Do Households Leave School Value Added on the Table? The Roles of Information and Preferences

Why Do Households Leave School Value Added on the Table? The Roles of Information and Preferences

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Abstract

Romanian households could choose schools with one standard deviation worth of additional value added. Why do households leave value added "on the table"? We study two possibilities: (i) information and (ii) preferences for other school traits. In an experiment, we inform randomly selected households about schools' value added. These households choose schools with up to 0.2 standard deviations of additional value added. We then estimate a discrete choice model and show that households have preferences for a variety of school traits. As a result, fully correcting households' beliefs would eliminate at most a quarter of the value added that households leave unexploited.

Citation

Ainsworth, Robert, Rajeev Dehejia, Cristian Pop-Eleches, and Miguel Urquiola. 2023. "Why Do Households Leave School Value Added on the Table? The Roles of Information and Preferences." American Economic Review, 113 (4): 1049-82. DOI: 10.1257/aer.20210949

Additional Materials

JEL Classification

  • D12 Consumer Economics: Empirical Analysis
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • I21 Analysis of Education
  • I28 Education: Government Policy