Can information on the economic returns to schooling motivate students to stay in school?

With Ciro Avitabile

If I could plot the number of bad decisions I’ve made throughout my life against my age there would certainly be a large hump between 15 and 18. Among the many bad decisions I made during adolescence—and believe me there were many- leaving school never even crossed my mind. To stay in high school, I not only had to be present but needed to put in a minimum effort not to fail more than a certain number of subjects which would jeopardize my right to enroll the following year.

Perhaps my decision to put some effort and stay in school was the outcome of inertia, family pressure and the influence of my peers (none of my friends in Monterrey, Mexico, where I’m from, dropped out) but part of it had to do with expectations. Surely, I did not run a wage equation to estimate the returns to schooling, but I had some evidence—mainly at home, through my dad, to believe that investing in education would pay off.

What many teenagers in Mexico are now facing is very different. Many of them have little or no family pressure or guidance and they see that one in every two of their peers drop out of high school. They don’t have information about the potential returns to education. When they do, it’s through a distorted perspective where they expect labor market returns lower than those observed. As a result, there is an under-investment in education in the form of less effort, less schooling, or both.

A potentially effective, low-cost, policy response is to better inform students about the returns to schooling. Following an influential study by Robert Jensen in 2009, the Mexican Secretariat of Public Education (SEP) designed and implemented an intervention to provide students in public, technical, high schools entering 10th grade information about the returns to high school and tertiary education.

The pilot program, known as Percepciones included an evaluation strategy, with 26 schools randomly assigned to the treatment group and 28 to the control group. In November 2009 the baseline data was collected and the information treatment was delivered. Students in treatment schools were given the following information (separately for men and women):

“In Mexico a man (woman) between 30 and 40 years old with a maximum education level of lower secondary earns, on average, $4,832 ($3,179) MX per month. A man (woman), ages 30 to 40, with an upper secondary diploma earns, on average, $6,466 ($4,827) MX per month, or $1,634 ($1,648) MX more per month. Therefore a man (woman) with an upper secondary diploma earns, on average, $784,320 ($791,040) MX more than those with a lower secondary degree throughout his (her) productive life.”

Students participating in the Percepciones pilot were identified, almost three years after, in ENLACE 12^th grade. This is a census-based, standardized test implemented in May 2012. In a new paper, “The heterogeneous effect of information on student performance: evidence from a randomized control trial in Mexico” Ciro Avitabile and I measure the impact of information on high school graduation rates and test scores (in math and language subjects).

The baseline data shows that boys under-estimate incomes of high school graduates by 25% and girls by 35%, relative to the ones reported by the national employment survey (ENOE). Three years after the intervention, expected earning among students in the treatment group were closer to those reported by ENOE vis-à-vis the control.

Even if students raised their expectations, the intervention did not have a significant effect on high school graduation rates. However, the information treatment significantly improved learning outcomes, especially math test scores among girls and students from relatively better-off households (see figure below).