Education Interventions Improve Economic Rationality

Associate Professor, Department of Economics, Seoul National University.

Please see Prof. Choi's CV for more information.

Schooling rewards people with labor market returns and generates non-pecuniary benefits in other realms of life. However, there is no experimental evidence showing that education interventions improve individual economic rationality. We examine this hypothesis by exploiting a randomized one-year financial support program for education in Malawi that reduced absence and dropout rates and increased scores on a qualification exam of female secondary school students. We measured economic rationality 4 years after the intervention using lab-in-the-field experiments to create scores of consistency with utility maximization that are derived from revealed preference theory. We find that those treated had higher scores of economic rationality. The results remain robust after controlling for changes in cognitive and non-cognitive skills. Our results suggest that education enhances the quality of economic decision-making.