Finance and Economics Discussion Series (FEDS)
Should Children Do More Enrichment Activities? Leveraging Bunching to Correct for Endogeneity
Carolina Caetano, Gregorio Caetano, and Eric Nielsen
We study the effects of enrichment activities such as reading, homework, and extracurricular lessons on children's cognitive and non-cognitive skills. We take into consideration that children forgo alternative activities, such as play and socializing, in order to spend time on enrichment. Our study controls for selection on unobservables using a novel approach which leverages the fact that many children spend zero hours per week on enrichment activities. At zero enrichment, confounders vary but enrichment does not, which gives us direct information about the effect of confounders on skills. Using time diary data available in the Panel Study of Income Dynamics (PSID), we find that the net effect of enrichment is zero for cognitive skills and negative for non-cognitive skills, which suggests that enrichment may be crowding out more productive activities on the margin. The negative effects on non-cognitive skills are concentrated in higher-income students in high school, consistent with elevated academic competition related to college admissions.
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