UC Berkeley

How do people make big life decisions such as career or fertility choices? Big life decisions such as these are crucial determinants of individual life outcomes and together also drive many societal outcomes such as social mobility or population growth. In this dissertation, I therefore ask: how do people make big life decisions and how might they impact outcomes at the societal level? I start by asking the following question: how stable are preferences with respect to big life decisions?

In the first chapter, co-authored with Joan Hamory, Jennifer Johnson-Hanks, and Edward Miguel, we therefore investigate the stability of Kenyans' fertility preferences over 9 years. Using a sample of 351 Kenyan women, we find that most of them change their desired fertility over time. Over a time horizon of 9 years, 63% of women changed their desired fertility by at least one child, and 20% changed their desired fertility by two or more children. While desires are unstable, respondents perceive their desires to be stable, both in anticipation and in their memory. They underestimate how much their desires will change in the future and especially underestimate increases in their desired fertility. They also overestimate how stable their desires have been in the past, and strongly underestimate past increases in their fertility desires. The findings demonstrate that even for important life domains, desires are subject to considerable change over time. This raises the question of how these preferences initially form and what factors shape them over time.

In the second chapter, I examine how educational aspirations are transmitted within families and whether parental influence contributes to the socio-economic gap in college attendance. In Germany, high school graduates who lack parents with college experience are 40 percentage points less likely to attend college than those with college-educated parents, despite college being free. This chapter provides evidence that parental influence explains a significant portion of this gap through at least two channels: one, parental pressure and two, the intergenerational transmission of beliefs and preferences. To understand parental influence, I conduct a field experiment with 1,195 students and 819 parents in Germany. I experimentally make students' stated college plans visible to parents, which doubles the socio-economic gap in college plans to 27 percentage points. This is mainly driven by a large increase in college plans among students with college-educated parents. To disentangle mechanisms, I collect detailed survey data on students' and parents' subjective expectations for various career tracks and estimate a structural model of career choice under uncertainty. Model simulations indicate that 40% of the socio-economic gap in college plans is explained by parental pressure and 44% by students internalizing family-specific beliefs. A crucial follow-up question is when is parental influence good and when is it bad? One aspect that matters for answering this complex question is what informs parents' preferences and beliefs.

I take a first step at addressing this question in the third chapter, by analyzing how people learn from important personal experiences and showing that motivated memory biases influence how life outcomes shape preferences and beliefs. I design randomized experiments around memory and embed them in a panel tracking fertility preferences and actual fertility for 3,928 Kenyans over a decade from their early twenties to their thirties. Using data on respondents' actual past fertility desires, I provide experimental incentives to remember and to be reminded of past desires. I report five results. First, 30% of respondents have more children by their thirties than once desired. Second, respondents are systematically biased in recalling past fertility desires -- they mis-remember past desired fertility in the direction of current fertility. Third, financial incentives improve memory of neutral questions like Kenya's past vice-president. For those who do not have more children than once desired they also improve memory of past fertility desires. However, financial incentives do not improve memory of past fertility desires for those with more children than once desired, suggesting selective forgetting is deliberate and motivated. Consistent with motivated memory, and my fourth finding, respondents with more children than once desired forego money to avoid information about their past desires. Fifth, motivated memory affects what preferences respondents pass on to the next generation. Parents' advice to the next generation may thus be shaped by other concerns than their children's well-being. The influence family and parents have on individual and societal outcomes thus warrants more work on the different forms this influence can take and their welfare implications.