The (Lack of) Anticipatory Effects of the Social Safety Net on Human Capital Investment

Manasi Deshpande and Rebecca Dizon-Ross

American Economic Review, 2023, vol. 113, issue 12, 3129-72

Abstract: How does the expectation that a child will receive government benefits in adulthood affect parental investments in the child's human capital? Most parents whose children receive Supplemental Security Income (SSI) benefits overestimate the likelihood that their child will receive SSI benefits in adulthood. We present randomly selected families with the predicted likelihood that their child will receive SSI benefits in adulthood. Reducing parents' expectations that children will receive benefits in adulthood does not increase investments in children's human capital. This zero effect is precisely estimated. Likely explanations include parents working more themselves, nonfinancial goals influencing investment, and families facing investment constraints.

JEL-codes: G52 I26 I38 J13 J24 J31 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1257/aer.20230010

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