Nav: Home

Education interventions improve economic rationality

October 07, 2018

There has been sustained interest across behavioral and social sciences - including psychology, economics and education - in the question of whether people are born to be rational decision makers or if rationality can be enhanced through education.

A new study conducted by Prof. Hyuncheol Bryant Kim (Department of Policy Analysis and Management at Cornell University), Prof. Syngjoo Choi (Department of Economics at Seoul National University), Prof. Booyuel Kim (KDI School of Public Policy and Management), and Prof. Cristian Pop-Eleches (School of International and Public Affairs at Columbia University) set out to answer this question and found that education can be leveraged as a tool to help enhance an individual's economic decision-making quality, or economic rationality.

"Using a randomized controlled trial of education support and laboratory experiments that mimic real-life examples, we established causal evidence that an education intervention increases not only educational outcomes but also economic rationality in terms of measuring how consistently people make decisions to seek their economic goals." The research team said.

The research team examined this hypothesis by participating in an NGO-organized randomized controlled trial of education support in Malawi, which provided financial support for education in a sample of close to 3,000 female 9th and 10th graders.

The researchers conducted a long-term follow-up survey that measured educational outcomes and implemented financially incentivized laboratory experiments that measure decision making quality based on consistency with utility maximization, an individual's attempt to obtain the greatest value possible from a decision, as the criterion for economic rationality.

"We found that those who took part in the education intervention had higher scores of economic rationality, suggesting that education is a tool for enhancing an individual's economic decision-making quality," the research team said.

"While we know that schooling has been shown in previous work to have positive effects on a wide range of outcomes, such as income and health, our work provides evidence of potentially additional benefits of education coming from improvements in people's decision-making abilities," the research team said.

Rationality in human choices has been a cornerstone assumption in traditional economic analysis. However, mounting evidence shows that people tend to make systematic errors in judgment and decision-making and that there is a high level of diversity in the extent to which rationality is limited across decisions and individuals.

The research team point out that most other research on improving the quality of decision-making target the reduction of decision biases in particular contexts of economic activities. For example, behavioral economists have urged governments and policy makers to intervene in markets by restructuring choice environments without restraining people's freedom of choice.

A popular idea representing this position within behavioral economics are the so-called "nudges" proposed by Nobel Prize Winner Richard Thaler. Nudges are means of helping people make better choices that are often behaviorally tailored in particular economic contexts.

"We take a different stand: proper policy tools can enhance general capabilities of decision making," the research team said. "Education can better equip people for high-quality decision making for their lives."

say that this is something policy-makers can leverage to improve the lives within countries around the world.

"Governments must never neglect investments in human capital of their citizens," they said, noting that Malawi is ranked one of the lowest in the world in terms of human capital. "In addition, this evidence provides an additional rationale for investment in education in resource constraint settings such as Malawi and other developing nations."

Seoul National University

Related Education Articles:

The new racial disparity in special education
Racial disparity in special education is growing, and it's more complex than previously thought.
Education may be key to a healthier, wealthier US
A first-of-its-kind study estimate the economic value of education for better health and longevity.
How education may stave off cognitive decline
Prefrontal brain regions linked to higher educational attainment are characterized by increased expression of genes involved in neurotransmission and immunity, finds a study of healthy older adults published in JNeurosci.
Does more education stem political violence?
In a study released online today in Review of Educational Research, a peer-reviewed journal of the American Educational Research Association, three Norwegian researchers attempt to bring clarity to this question by undertaking the first systematic examination of quantitative research on this topic.
Education interventions improve economic rationality
This study proves that education can be leveraged as a tool to help enhance an individual's economic decision-making quality, or economic rationality.
Protestantism still matters when it comes to education, study shows
A new academic study, the first of its kind, reveals a significant and positive historical legacy of Protestant religion in education around the world.
Individual education programs not being used as intended in special education
Gone are the days when students with disabilities were placed in a separate classroom, or even in a completely different part of the school.
How does limited education limit young people?
A recent nationally-representative US Department of Education study found that 28 percent of fall 2009 ninth-graders had not yet enrolled in a trade school or college by February 2016 -- roughly six-and-a-half years later.
'Depression education' effective for some teens
In an assessment of their 'depression literacy' program, which has already been taught to tens of thousands, Johns Hopkins researchers say the Adolescent Depression Awareness Program (ADAP) achieved its intended effect of encouraging many teenagers to speak up and seek adult help for themselves or a peer.
Teenagers gamble away their education
The odds are stacked against teenagers who regularly gamble. A new study in Springer's Journal of Gambling Studies shows that a 14-year-old who gambles is more likely to struggle at school.
More Education News and Education Current Events

Top Science Podcasts

We have hand picked the top science podcasts of 2019.
Now Playing: TED Radio Hour

Why do we revere risk-takers, even when their actions terrify us? Why are some better at taking risks than others? This hour, TED speakers explore the alluring, dangerous, and calculated sides of risk. Guests include professional rock climber Alex Honnold, economist Mariana Mazzucato, psychology researcher Kashfia Rahman, structural engineer and bridge designer Ian Firth, and risk intelligence expert Dylan Evans.
Now Playing: Science for the People

#540 Specialize? Or Generalize?
Ever been called a "jack of all trades, master of none"? The world loves to elevate specialists, people who drill deep into a single topic. Those people are great. But there's a place for generalists too, argues David Epstein. Jacks of all trades are often more successful than specialists. And he's got science to back it up. We talk with Epstein about his latest book, "Range: Why Generalists Triumph in a Specialized World".
Now Playing: Radiolab

Dolly Parton's America: Neon Moss
Today on Radiolab, we're bringing you the fourth episode of Jad's special series, Dolly Parton's America. In this episode, Jad goes back up the mountain to visit Dolly's actual Tennessee mountain home, where she tells stories about her first trips out of the holler. Back on the mountaintop, standing under the rain by the Little Pigeon River, the trip triggers memories of Jad's first visit to his father's childhood home, and opens the gateway to dizzying stories of music and migration. Support Radiolab today at