Information, Role Models and Perceived Returns to Education: Experimental Evidence from Madagascar∗

This paper shows that increasing perceived returns to education strengthens incentives for schooling when agents underestimate the actual returns. I conducted a field experiment in Madagascar to study alternative ways to provide additional information about the returns to education: simply providing statistics versus using a role model–an actual person sharing his/her success story. Some argue that role models may be more effective than providing statistics to a largely illiterate population. However, this proposition depends on how households update their beliefs based on the information the role model brings. Motivated by a model of belief formation, I randomly assigned schools to the role model intervention, the statistics intervention, or a combination of both. I find that providing statistics reduced the large gap between perceived returns and the statistics provided. As a result, it improved average test scores by 0.2 standard deviations. For those whose initial perceived returns were below the statistics, test scores improved by 0.37 standard deviations. Student attendance in statistics schools is also 3.5 percentage points higher than attendance in schools without statistics. Consistent with the theory, seeing a role model of poor background has a larger impact on poor children’s test scores than seeing someone of rich background. Combining a role model with statistics leads to smaller treatment effects than statistics alone, also consistent with the theory. The key implication of my results is that households lack information, but are able to process new information and change their decisions in a sophisticated manner. ∗I wish to thank my advisors Esther Duflo, Abhijit Banerjee, and Tavneet Suri for their advice and support. Greg Fischer, Raymond Guiteras, Ben Olken, Maisy Wong, and participants of the MIT development and applied micro lunches have provided very helpful comments. I am indebted to the Madagascar Ministry of Education AGEMAD team, AFD, UNICEF, and the World Bank for support of this project. I also thank the TOTAL Fellowship for sponsoring me during this work. All errors are mine. †E-mail: [email protected]