The Department of Economics Applied Microeconomics Seminar Series presents

"Eliciting Maternal Subjective Expectations about the Technology of Cognitive Skill Formation"
with Flávio Cunha, Assistant Professor of Economics, University of Pennsylvania

Tuesday, May 21, 2013
3:30-5:00 p.m.
Social Science Plaza B, Room 3266 (Econ Library)

In this talk, Cunha formulates a model of human development in which mothers have subjective expectations about the technology of skill formation. The model is useful for understanding how maternal knowledge about child development affects the maternal choices of investments in the human capital of children. Unfortunately, the model is not identified from data that are usually available to econometricians. To solve this identification problem, Cunha develops a methodology to elicit maternal expectations about
the technology of skill formation. He uses survey instrument to interview a sample of disadvantaged African‐American women, finding that the median subjective expectation about the elasticity of child development with respect to investments is between 4% and 19%. In comparison, when he estimates the technology of skill formation from the CNLSY/79 data, he finds that the elasticity is between 18% and 26%. He uses the model and unique data to answer a simple but important question: What would happen to investments and child development if he implemented a policy that moved expectations from the median to the objective estimates that he obtains from the CNLSY/79 data? According to his estimates, investments would go up by an amount between 4% and 24% and the stocks of cognitive skills at age 24 months would go up between 1% and 5%. Needless to say, the impacts of such a policy would be even higher for mothers whose expectations were below the median.

For further information, please contact Gloria Simpson, or 949-824-5788.

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