Parental Investments in Children

I watched the Patriots beat the Giants a few days ago (to go 16 - 0 for the regular season) with a twinge of annoyance and envy. The annoyance came from the fact that I really dislike the Patriots. The envy had to do with something else: I wished that I could have had the experience of playing football and setting brilliant records, as well.

For pretty much my entire childhood, my number one desire was to play football. However, my football experiences never really went beyond neighborhood pick-up games (though I was a total beast in those) and my experience with team sports was limited to rec basketball, tee-ball and soccer (all poor approximations of my dream). I recently asked my parents why they didn't enroll me in pee-wee football. My mom's answer: "I knew that Indians wouldn't make it."

My mom's reply is interesting on many levels. Mainly, it indicates that my parents were careful to allocate my time to activities with higher expected returns over my life cycle, where the probabilities used to calculate the expectations came from what they knew of the world (can you name an Indian NFL star?) and what they knew of me ("non-well-built"). (Of course, I don't necessarily think they accounted for all costs, benefits and constraints in their analysis. The strength, mental toughness, competitiveness and "team player" skills would have likely benefited me in the activities and career paths I've chosen to focus on since childhood. In addition, I spent a lot of time as a kid doing "non-productive" activities; that is, I don't think time constraints were binding. As such, I would have gladly substituted some of that time for football practice, I think.)

In general, the investments parents make in their children - the "hows" and "whats" - is a rich area of research in economics. An interesting paper by Kaivan Munshi and Mark Rosenzweig illustrates how parental investments in childhood education in India vary depending on broader economic conditions and traditional caste networks:

This paper addresses the question of how traditional institutions interact with the forces of globalization to shape the economic mobility and welfare of particular groups of individuals in the new economy. We explore the role of one such traditional institution - the caste system - in shaping career choices by gender in Bombay using new survey data on school enrollment and income over the past 20 years. We find that male working class - lower caste - networks continue to channel boys into local language schools that lead to the traditional occupation, despite the fact that returns to non-traditional white collar occupations rose substantially in the 1990s, suggesting the possibility of a dynamic inefficiency. In contrast, lower caste girls, who historically had low labor market participation rates and so did not benefit from the network, are taking full advantage of the opportunities that became available in the new economy by switching rapidly to English schools.

Another interesting question pertains to how parents allocate resources differentially across children. For a given set of parents, each child born to the couple will possess slightly different traits as far as intelligence, health, physical ability, and so on. Will parents tend to make productive investments (schooling, health care, etc) to children whose endowments will likely lead them to be more successful in the labor market (i.e., kids who offer higher marginal returns to various investments)? Or will they tend to invest more in the laggard children? To the extent that these decisions come down to differences in parental preferences, determining whether parents tend to reinforce or equalize child endowments comes down to an empirical question.

Two recent and interesting working papers offer some insight into this question. The first paper, by Marcos Rangel, looks at how mixed race couples in Brazil allocate educational investments across their kids. Rangel finds that parents tend to favor children with lighter complexions, presumably reflecting their better prospects in the Brazilian labor market. The second paper, by Ashlesha Datar, Arkadipta Ghosh, and Neeraj Sood, looks at health care investments among children in India. Their findings indicate that Indian parents favor children with higher birthweights, which has been shown to correlate with better health and economic prospects later in life.

Interestingly, the Datar, et al, paper also illustrates the sensitivity of the investments gradient to external socioeconomic factors: the propensity to investment relatively less in the lower birth weight child is found to be higher in areas with higher infant mortality rates. This same finding is highlighted in a well-known paper by Elaina Rose exploring gender bias in India. She finds that the ratio of female to male infant mortality is higher in rural areas during times of drought, when economic constraints are more likely to have bite.