DISCUSSION PAPER SERIES IZA DP No. 11730 Educational Inequality and Public Policy Preferences: Evidence from Representative Survey Experiments Philipp Lergetporer Katharina Werner Ludger Woessmann AUGUST 2018 DISCUSSION PAPER SERIES IZA DP No. 11730 Educational Inequality and Public Policy Preferences: Evidence from Representative Survey Experiments Philipp Lergetporer ifo Institute and CESifo Katharina Werner ifo Institute Ludger Woessmann University of Munich, ifo Institute, CESifo, CAGE and IZA AUGUST 2018 Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world’s largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. IZA – Institute of Labor Economics Schaumburg-Lippe-Straße 5–9 Phone: +49-228-3894-0 53113 Bonn, Germany Email: [email protected] www.iza.org IZA DP No. 11730 AUGUST 2018 ABSTRACT Educational Inequality and Public Policy Preferences: Evidence from Representative Survey Experiments* To study how information about educational inequality affects public concerns and policy preferences, we devise survey experiments in representative samples of the German population. Providing information about the extent of educational inequality strongly increases concerns about educational inequality but only slightly affects support for equity- oriented education policies, which is generally high. The small treatment effects are not due to respondents’ failure to connect policies with educational inequality or aversion against government interventions. Support for compulsory preschool is the one policy with a strong positive information treatment effect, which is increased further by informing about policy effectiveness. JEL Classification: D30, H52, I24, H11, D63, D83, D72, P16 Keywords: inequality, education, information, survey experiment Corresponding author: Ludger Woessmann Ifo Institute for Economic Research at the University of Munich Poschingerstr. 5 81679 Munich Germany E-mail: [email protected] * For helpful comments, we would like to thank Peter Bergman, Elisabeth Bublitz, Jonathan Davis, Paul Hufe, Emmanuel Saez, Stefanie Stantcheva, Joachim Winter, and seminar participants at Harvard, the CESifo education meeting in Munich, the European Society for Population Economics in Glasgow, the German Economic Association in Vienna, its economics of education group in Hannover, and the CRC retreat in Schwanenwerder. We are also most grateful to Franziska Kugler and Elisabeth Grewenig for their help in preparing the surveys. Financial support by the Leibniz Competition (SAW-2014-ifo-2) and the German Science Foundation (CRC TRR 190) is gratefully acknowledged. 1. Introduction Over the past decades, income and wealth inequality has increased in many industrialized countries (e.g., Piketty and Saez, 2014). The reasons for this trend are manifold, but increasing wage premia for higher education and cognitive skills seem to account for a large share of rising earnings inequality (Autor, 2014). At the same time, there is mounting evidence that factors outside of an individual’s control determine educational achievement to a large extent. In particular, family background is a strong predictor of children’s educational performance all over the world (e.g., Schuetz et al., 2008; Björklund and Salvanes, 2011; OECD, 2016). Since educational inequality has important implications for economic inequality and the inequality of opportunity (e.g., Nickell, 2004; Corak, 2013), education policies that attenuate the influence of family background have taken center stage in the political debate. One often given reason for supporting stronger education polices is the belief that equalizing education outcomes will lead to reduced income disparities and greater opportunities for children in poor families. This paper investigates determinants of public preferences for education policies aimed at fostering equality of opportunity. Traditionally, governments try to mitigate inequalities in income and other economic outcomes through redistribution. Policies aimed at equality of outcomes, such as progressive taxation or minimum wages, might yield economic inefficiencies since they can distort labor supply and human capital accumulation decisions (e.g., Bovenberg and Jacobs, 2005). The trade-off between equity and efficiency hardly applies to policies aimed at equality of opportunity, which have the goal to detach the opportunity to turn effort into economic success from individual circumstances such as family background.1,2 Consequently, economists have been advocating policies that equalize access to education in order to tackle income inequality (e.g., Alvaredo et al., 2018). But while a large strand of empirical literature has studied the public’s preferences for policies aimed at equality of outcomes (e.g., Alesina and La Ferrara, 2005; Alesina and Giuliano, 2011; Kuziemko et al., 2015), the determinants of public preferences for – and thus, the political feasibility of – policies aimed at equality of opportunity are largely unexplored. 1 The central idea of the concept of equality of opportunity is that individuals should be compensated for deficits in circumstances which are beyond their control (e.g., family background, race, or gender) but not for differences deriving from effort to turn opportunities into actual advantages (e.g., Roemer, 1998). In a laboratory experiment, Cappelen et al. (2007) find that about 40 percent of participating university students exhibit preferences that can be classified as “strict egalitarians” (i.e., favoring equality of outcomes) and another roughly 40 percent as “liberal egalitarians” (i.e., favoring equality of opportunity). 2 Of course, equity-oriented education policies might also have indirect effects on economic efficiency, e.g., when education policies are financed by taxes that affect efficiency. Arguably, though, these indirect effects are less severe than the immediate efficiency effects of traditional redistributive policies and may be overcompensated by positive efficiency effects of the educational investments. 1 We study how the German public’s concerns about educational inequality and its preferences for equity-oriented education policies are affected by information about the extent of educational inequality. Given that the public often holds biased beliefs about the extent of inequality in society (e.g., Norton and Ariely, 2011), we focus on how information on actual educational inequality shapes public policy preferences. To this end, we conduct survey experiments among representative samples of the German voting-age population (N=7,380). In the experiments, randomly selected treatment groups are informed about the association between parents’ socioeconomic status and their children’s educational achievement before answering questions about concerns about educational inequality and preferences for a series of equity-oriented education policies. The control group answers the same questions without receiving information. We find that a majority of the German public is concerned about the extent of educational inequality and that providing factual information about educational inequality increases these concerns even further. In the uninformed control group, 55.4 percent view educational inequality as a serious or very serious problem (as opposed to a medium problem or less on a five-point scale). Even from this high baseline level, information provision strongly increases concerns by 12.4 percentage points to 67.8 percent. The information effect, which we replicate in two independent and representative samples, varies with respondents’ prior beliefs about the extent of educational inequality: The treatment has the largest effect on respondents who initially underestimated the extent of educational inequality and decreases with higher belief accuracy. This pattern is particularly pronounced among respondents who are relatively confident that their beliefs are correct, suggesting that the treatment effect is driven by genuine information updating, rather than priming or demand effects. Resurveying respondents in a follow-up survey about two weeks after the experiment, we find that the information effect on respondents’ beliefs and concerns about educational inequality persists, further validating an interpretation of genuine information effects. Going beyond concerns about educational inequality to preferences for equity-oriented education policies, we find that baseline support for many education policies aimed at reducing educational inequality is high. Focusing on policies that target equality of educational opportunity in the sense of preventing disadvantages that result from children’s family circumstances (Coleman, 1975), we elicit