The complexity of educational choices made by parents for their children

At a high level, choice decisions relate to trade-offs between consumption and savings, now and across subsequent time periods subject to constraints and uncertainty.  For parents, educational choices for their children are constrained by the parents’ income, time and regulations, and subject to high levels of uncertainty over very long time frames. Parental choice relating to investments in their children’s education only really occurs in the broad range of the socio-economic ‘middle class’. For the very wealthy, choice is the default of ‘only the best’ which requires little to no effort in decision making despite the cost of the education itself. Parents in low socio-economic conditions lack both the time and experience to research education options and the monetary resources to capture opportunities as they arise, leading to an acquiescence to the default choice of no action.

Rational choice theory suggests that parents are utility maximisers who make decisions from clear value preferences and can be relied upon to make decisions in the best interests of their children (Becker & Tomes 1976, 1979). Yet in deciding which school a child should attend, under rational choice conditions, a parent is required to make a series of complex intergenerational and intertemporal choices that would challenge seasoned economists. Educational choices are predominantly path dependent, subject to imperfect information and in most cases irreversible. Ordinary parents however, need to make these decisions with little training and with limited time to evaluate options. Instead, parents rely on a suite of behavioural heuristics in order to achieve a good outcome for their children.  Individual choice is also context dependent, subject to the experiences of parents, their expectations of the future, a duty to their children and emotional attachment.

How can a parent make optimal decisions in the face of so many possible choices and outcomes? Choices which are necessarily sequential and irreversible once made. To overcome the complexity of choice, humans have developed decision strategies which allow shortcuts to be taken to achieve a ‘good’ outcome in the face of incomplete information and limited time for evaluation. These heuristics, intuitive decision rules, allow mathematically hard problems to be solved under restrictive conditions where a good outcome is achieved at the expense of a perfect outcome. For a parent, a perfect outcome is only possible by chance and impossible by deliberate calculation.

While heuristics are ‘quick & dirty’ solutions, they draw on highly sophisticated underlying processes. Tversky & Kahneman (1983) testing the conjunction rule in likelihood rankings using the classic ‘Bill & Linda’ experiments showed that there was no difference between naïve and sophisticated participants. Experiments undertaken by Gigerenzer & Goldstein (1996) tested the effectiveness of fast and frugal decision heuristics, such as ‘take the best, ignore the rest’, against sophisticated statistical estimation strategies, such as Bayesian networks. Their research showed that fast and frugal heuristics did not fall too far behind a Bayesian network approach. More interestingly, as the quality of available information used for estimation decreased, heuristic strategies became more effective when compared with the more sophisticated strategies.

The complexity of the decision architecture associated with making choices, combining both rational choice and behavioural components, is illustrated in the ‘Choice Process’ diagram below:

The Choice Process


Becker, G. S., & Tomes, N. 1976. Child Endowments and the Quantity and Quality of Children. The Journal of Political Economy, 84(4), S143-S162.

Becker, GS & Tomes, N 1979, ‘An equilibrium theory of the distribution of income and intergenerational mobility’, The Journal of Political Economy, 1153-1189.

Tversky, A & Kahneman, D 1983, ‘Extensional versus intuitive reasoning: The conjunction fallacy in probability judgment’, Psychological review, 90(4), 293.

Gigerenzer, G & Goldstein, DG 1996, ‘Reasoning the fast and frugal way: models of bounded rationality’, Psychological review, 103(4), 650.

McFadden, D 2001 ‘Economic Choices’, The American Economic Review 91(3): 351-378.

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