Abstract
In this paper we combine a unique large scale field experimental data on preferences and longitudinal household survey data from rural Uganda to estimate the impact of parental risk aversion, time preferences and loss aversion on educational investment. Our results show that parental risk aversion is increasing in wealth. On a whole, we find that risk aversion is positively correlated with educational investment measured in per school age child educational expenditure. Further analysis revealed that parental risk aversion is negatively associated with educational investment for poorer households. Pathway analysis suggests that risk averse households are less credit constrained. The hypothesis that parental risk aversion depresses educational investment may only be tenable for poor households’ in rural Uganda.
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