Public Release: 

In Malawi: Enabling smarter economic decisions through education intervention

American Association for the Advancement of Science

Contributing to work that explores the broader benefits that schooling can bring, particularly in resource-constrained environments, researchers surveying females in Malawi report that education enhanced their ability to make smart economic decisions. The results highlight the broader societal importance of educational policies, given the potential losses in welfare associated with an individual's poor economic decision-making capability. In traditional economic analyses, it is often assumed that people will make rational choices when faced with a decision. However, social and behavioral research has repeatedly shown that individuals are highly susceptible to making systematic errors in judgment, which can lead to a great variety of non-ideal economic decisions. Schooling has been shown to improve a wide variety of socioeconomic outcomes, including income, health and crime. However, little is known about how it influences an individual's general decision-making skills, and their ability to make quality economic choices specifically. To address this question, Hyuncheol Kim and colleagues leveraged a previously conducted trial of education support in Malawi, a country with a very low rate of education for young women. The educational intervention program, conducted between 2011 and 2013, provided financial support for over 2,800 female students in secondary schools throughout the country. Four years following this intervention, to evaluate not only its educational benefits but also any related to decision making, Kim et al. presented students of the program with a set of financial decision problems involving the allocation of funds to immediate or future expenses, decisions known to be good measures of economic rationality. The results of the researchers' follow-up survey indicate that not only educational outcome improved for students who received support (both in terms of school attendance and test scores, which were better in participating schools) but also, economic rationality greatly improved for those who received enhanced education.

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