Social Interactions and Preferences for Schools: Experimental Evidence from Los Angeles
Presenta: Christopher Campos (Chicago Booth)
This paper studies the role of preferences, information, and social interactions in education markets. I study how parents’ choices respond to information, the type of information their choices are most responsive to, and importantly, how their responses depend on other parents’ information. This is motivated by the fact that the success of market-oriented reforms depends crucially on parents identifying and choosing effective schools, but a growing body of evidence suggests that may not always be the case. To understand the role of biases, I begin by eliciting parents’ beliefs about school quality and peer quality. To study relative preferences for school and peer quality, I cross-randomize two margins of information and compare how parents’ choices respond in various scenarios. Last, to study social interactions, I use a spillover design that allows me to detect treatment effects for untreated parents in treated schools. I find modest levels of bias for both school and peer quality. I find that receiving information on either quality margin changes parents’ decisions, corroborating the beliefs data that parents are imperfectly informed about each. I then show that social interactions are prevalent, generating treatment effects for untreated parents in treated schools that are identical to treated parents. Importantly, treatment effects are only documented among parents in schools where a sufficiently large number of other parents are treated with information, emphasizing the importance of social interactions in generating meaningful changes in demand. The social interactions are sufficiently large to generate market-level consensuses moving average demand toward higher value-added schools and without a meaningful reduction in peer quality. These findings suggest that when parents are perfectly informed about both school and peer quality, parental interactions are essential for interpreting the information and that demand moves in a way consistent with parents rewarding effective schools.
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