Parents’ Biased Beliefs and Competitive Investments in Education: A Field Experiment

August 2026

Using a field experiment in China, we demonstrate that parental investment decisions are affected by their beliefs about their peers’ investment levels, and that they often hold biased beliefs about these levels. When provided information about the true distribution of tutoring hours invested among their reference groups, parents in the treated group significantly adjust their investments (by over 30%) accordingly. When parents receive the common-knowledge message that the information is also available to their peers, they are 8.6% more likely to believe other parents would increase their investments. One month after the treatment, participants had increased their actual investment hours by 1.14 hours per week, a 51% increase relative to the average level. The effect is mostly driven by those with low baseline investment levels. Our findings suggest that one driver of investment in private tutoring is the fear of falling behind.

Keywords

Tutoring, education investment, field experiment, economics of education, behavioral economics

Education level

K-12 Education

Topics

Families and Communities