Research has shown that parental investments of time and money not only shape children’s futures, but also affect the intergenerational transmission of economic opportunity. One of the key factors determining the level of parental investment is parents’ belief in economic mobility. If the kids have a shot at the “American Dream,” in other words, parents are more inclined to invest in—and preserve—their children’s futures.
However, how influential are parental beliefs in economic mobility? To what degree do these beliefs drive decision-making? This novel study contributes to the quantitative literature on these questions through an information experiment with a sample of 1,000 parents of children ages 5-15. While prior studies rely on a set of questions and hypothetical scenarios for parents to consider, this work directly manipulated parents’ beliefs through randomly assigning parents to watch one of two videos proposing that their child was either likely or unlikely to achieve economic mobility. The authors’ methodology allows them to obtain causal estimates of how shifting parental beliefs affects parents’ decision making in the realm of time and money investments. They find the following:
- Parents are highly sensitive to signals about future economic mobility prospects of their children. Parents who view videos that highlight upward economic mobility are significantly more likely to perceive socioeconomic mobility as possible than parents exposed to information highlighting downward economic mobility.
- Parents induced to believe in the likely possibility of upward mobility respond by indicating a greater willingness to spend more time boosting their children’s development (i.e., time helping with schoolwork), they spend more time filling out questions about their child on a survey, and they report increased willingness to pay for development resources.
- Finally, these findings hold for all families, regardless of socioeconomic status.
Bottom line: The American Dream is more than an abstract idea for parents, and this work provides some of the first causal evidence for the influence of such beliefs on parental decision-making. In doing so, this research contributes to current discussions about the relevance of the American Dream, especially regarding widespread perceptions of increasingly lower returns to college education. This pessimism about higher education is countered by an otherwise growing economy with a consistently low unemployment rate, which suggests a mismatch between parents’ economic perceptions and the stakes of their children’s educational attainment. Given the link between beliefs about children’s economic mobility prospects and parents’ investment in children as revealed in this work, current parental attitudes about the economy could jeopardize children’s educational futures. As for the basis of parental beliefs—whether driven by the media, personal experience, peers, or other sources—that is a question for future research.