Chicago Booth Review Podcast What makes welfare recipients invest in their kids' human capital?
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Nov 19, 2025 In this engaging discussion, economist Rebecca Dizon Ross, an expert in social safety nets, delves into her fascinating research about parental investments in the education of disabled children. She addresses the common belief that welfare disincentivizes work and explores how information can reshape parents’ perceptions about social benefits. Surprisingly, while her findings shift beliefs, they don't lead to increased educational spending. Rebecca also highlights how nonfinancial motives and constraints play significant roles in these decisions.
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How Future Benefits Could Lower Education Incentives
- Parents might reduce educational investment if they expect adult benefits to replace earnings.
- That effect works via an income offset and high effective marginal tax rates on earnings.
Different Disability Rules Cause Large Dropoffs
- SSI uses different disability standards for kids and adults, so many children lose benefits at 18.
- Parents often overestimate their child's chance of remaining eligible into adulthood.
Parents Vastly Underestimate Removal Risk
- In our sample, some kids had a 70% chance of losing benefits but parents thought it was near zero.
- The average parent belief was about 20% versus an actual 70% removal likelihood.