(The) effect of information disclosure on parents' educational investment

Abstract

Along with an advance in information and communications technology, the Artificial Intelligence (AI)-powered smart learning has reshaped the educational environment innovatively. Previously, most parents had to determine their educational investment based on potentially inaccurate belief on their child’s academic level or interests due to lack of information about their children. However, parents can invest effectively in child’s education considering their child’s aptitude and interest after they receive information on children through smart learning. Built upon the previous economics literature on education, we develop a theoretical model for the change in parents’ educational investment when the information asymmetry between parents and children disappears and then empirically test our theoretical prediction. We find that upon the information disclosure, parents increase their investment on children and that they are more sensitive to scholastic investment than the non-scholastic counterpart. In addition, the investment change by parents with low-performing children turns out to be higher than that of those with high-performing children due to a larger disparity between the parents’ expectation and the actual child’s academic ability.