Econometrics & Applied Economics Seminar - Anna Sanz-de-Galdeano (University of Alicante)

Title: Sibling Differences in Educational Polygenic Scores: How do Parents React?

Abstract:  We study whether parents’ investment decisions exacerbate or mitigate differences in their children’s genetic predisposition for education. Parental investment decisions depend both on parental preferences regarding inequality in the distribution of their children’s quality and on how costly it is for parents to add to their children’s quality by investing in their human capital (or the price effect). Our empirical strategy allows us to isolate the effects of parental preferences regarding equality from the price effect, a distinction that cannot be made when relying on sibling or twin fixed-effects models. Importantly, recent advances in molecular genetics allow us to use genetic variants that predict educational attainment as a measure of children’s endowments. Individuals’ genetic makeup is fixed at conception, so these indicators cannot be affected by parental investment decisions. We find evidence that parents of nontwin siblings display inequality aversion and, given the absolute endowment level of one child, they invest more in him/her if his/her sibling is better-endowed. Parents of twins instead display neutral preferences regarding equality, possibly because it is difficult to provide differential parental investments across children of the same age.