Roles of Parental Risk and Time Preferences in Parental Investment and Aspirations

This paper examines how parents’ risk and time preferences shape their parental investment and aspirations for children’s education and occupations, using a longitudinal survey conducted in rural Thailand. We jointly estimate risk and time preference parameters based on economic theory, using incentivized experiments and incorporating heterogeneous individual background consumption. The first key finding is that parents view parental investment as a risky activity from the early childhood stage onward. Second, parents value later investments more than earlier ones. Third, parents perceive achieving educational success and pursuing a STEM career as risky endeavors for their children. This paper also finds that children with divorced parents tend to receive less parental investment, and their parents expect less from them.