THEORETICAL MODELS THEORETICAL MODELS OF CHILD CARE OF CHILD CARE

DECISION MAKING DECISION MAKING Ajay Chaudry, The Urban InstituteAjay Chaudry, The Urban InstituteJulia Henly, University of ChicagoJulia Henly, University of Chicago

Marcia Meyers, University of WashingtonMarcia Meyers, University of Washington

Child Care Policy Research Consortium Child Care Policy Research Consortium October 30, 2009October 30, 2009

Why an interest in child care decision Why an interest in child care decision making?making?

Widespread and growing interest in child careWidespread and growing interest in child care Significance of the early yearsSignificance of the early years Key to the work-based social safety net for low-income familiesKey to the work-based social safety net for low-income families Low quality of many child care arrangementsLow quality of many child care arrangements Want to know why do parents decide to use the care they do to see Want to know why do parents decide to use the care they do to see

if those decisions and ultimately child outcomes can be improved if those decisions and ultimately child outcomes can be improved through changes to policy and practicethrough changes to policy and practice

Policy areas depend on an understanding of child care decision-Policy areas depend on an understanding of child care decision-making, including:making, including: Subsidy policySubsidy policy Welfare and Work Supports policiesWelfare and Work Supports policies Work & Family policyWork & Family policy Quality Improvement EffortsQuality Improvement Efforts

Why is this a challenge to figure out?Why is this a challenge to figure out?

Child care decisions are complex and often invisible.Child care decisions are complex and often invisible. Some market-like aspects to child care, and many non-Some market-like aspects to child care, and many non-

market like aspects.market like aspects. Confounding “Use” with “Preference”Confounding “Use” with “Preference” Preferences are difficult to interpret because “choices” Preferences are difficult to interpret because “choices”

are often constrained.are often constrained. Access and use of child care arrangements remain Access and use of child care arrangements remain

highly stratified by family income and other demographic highly stratified by family income and other demographic characteristics.characteristics.

Four Conceptual Frameworks Four Conceptual Frameworks of Child Care Decisionsof Child Care Decisions

Economic “Choice” ModelEconomic “Choice” Model Social Network ModelSocial Network Model Psychology & Behavioral Economics Psychology & Behavioral Economics

Insights into Decision MakingInsights into Decision Making Accommodation ModelAccommodation Model

Economic Choice Model of Decision Economic Choice Model of Decision MakingMaking

Consumer or Consumption Consumer or Consumption ChoiceChoice Theory Theory Also called “rational choice” models, posits that individuals Also called “rational choice” models, posits that individuals

relate their personal relate their personal preferencespreferences to the set of alternatives to the set of alternatives they face by considering tradeoffs among the options they face by considering tradeoffs among the options relative to their preferences, and make a choice that relative to their preferences, and make a choice that maximizes their satisfactionmaximizes their satisfaction..

Choice models recognize that choices are subject to Choice models recognize that choices are subject to budget budget constraintsconstraints; Individuals make decisions about the ; Individuals make decisions about the type, quality, and quantity of a good or service to use type, quality, and quantity of a good or service to use subject to subject to constrained optimizationconstrained optimization..

Economic Choice Model of Decision Economic Choice Model of Decision Making (cont)Making (cont)

Appeal of choice modelsAppeal of choice models Well-structuredWell-structured so that one can weigh multiple personal and care so that one can weigh multiple personal and care

factors that go into parents’ preferences and thus the nature of the factors that go into parents’ preferences and thus the nature of the tradeoffs that go into making child care decisions.tradeoffs that go into making child care decisions.

Individual care Individual care choices are easily aggregatedchoices are easily aggregated.. Aspects of the model are Aspects of the model are empirically testableempirically testable Offer strong Offer strong predictive capacitypredictive capacity so one might measure how a price so one might measure how a price

change or particular policy change might alter child care choiceschange or particular policy change might alter child care choices

Choice models have shown to be empirically effective in Choice models have shown to be empirically effective in explaining how the directions of changes in care choices explaining how the directions of changes in care choices that might occur as a result of changes in prices (Blau).that might occur as a result of changes in prices (Blau).

However, choice models have been less effective in However, choice models have been less effective in demonstrating role quality plays in choices and leaves many demonstrating role quality plays in choices and leaves many aspects of the variations found in child care choices aspects of the variations found in child care choices unexplained.unexplained.

Economic Choice Model of Decision Economic Choice Model of Decision Making (cont)Making (cont)

Problems with using choice models alone in explaining Problems with using choice models alone in explaining observed child care decisionsobserved child care decisions Problematic Assumptions Problematic Assumptions in the economic “choice” model that in the economic “choice” model that

may not be true for child care decisions, or at least many child care may not be true for child care decisions, or at least many child care decisions.decisions. Preferences Preferences for child care for child care not static and exogenousnot static and exogenous; and may not be ; and may not be

revealed in observed child care decision.revealed in observed child care decision. Good or full Good or full informationinformation regarding alternatives may not be available and regarding alternatives may not be available and

there are significant there are significant asymmetries of informationasymmetries of information Individual and discreteIndividual and discrete nature of choices not the case for many child nature of choices not the case for many child

care decisions.care decisions. Market FailuresMarket Failures in child care include imperfect information and in child care include imperfect information and

potential externalities to child care decisions. potential externalities to child care decisions. ComplexityComplexity of child care decisions for which the economic model of child care decisions for which the economic model

does not account including the multiplicity of significant does not account including the multiplicity of significant constraints(cost, supply, job schedule, information), segmentation in constraints(cost, supply, job schedule, information), segmentation in the child care market, and timing and simultaneity of decisionsthe child care market, and timing and simultaneity of decisions

Social Network ModelSocial Network Model A sociological network model of decision making considers how A sociological network model of decision making considers how

individual choices are individual choices are mediated by social relationshipsmediated by social relationships.. Family, friends, relatives, neighbors, coworkersFamily, friends, relatives, neighbors, coworkers Also formal/professional ties and organizational/service-related tiesAlso formal/professional ties and organizational/service-related ties

According to a network model, individuals are instrumental and rational According to a network model, individuals are instrumental and rational in their approach to decision-making, however choices are shaped by in their approach to decision-making, however choices are shaped by social network characteristics and processes.social network characteristics and processes. Network models do not “ignore individuals, their self-interest, their purposive action, or Network models do not “ignore individuals, their self-interest, their purposive action, or

their rationality; [the sociological network model] simply their rationality; [the sociological network model] simply assigns them a different assigns them a different priority in actionpriority in action” (p. 1099, Pescolsolido, 1992). ” (p. 1099, Pescolsolido, 1992).

How social networks matter for child care? Social networks are an How social networks matter for child care? Social networks are an important source of important source of informationinformation, , supportsupport, and , and influenceinfluence. As such, . As such, they shape child care choices by:they shape child care choices by: Providing information about child care opportunities (thereby influencing the type and Providing information about child care opportunities (thereby influencing the type and

quality of information available to families)quality of information available to families) Providing concrete child care support and financial assistance (thereby affecting child Providing concrete child care support and financial assistance (thereby affecting child

care supply)care supply) Exerting normative pressure – telling network members what kinds of care are Exerting normative pressure – telling network members what kinds of care are

acceptable or not (thereby influencing preferences)acceptable or not (thereby influencing preferences)

Not all networks are the sameNot all networks are the same Networks can be Networks can be opportunity enhancing opportunity enhancing or or opportunity limiting opportunity limiting

depending on their characteristics.depending on their characteristics. Strong vs Weak Ties (and other structural dimensions of networks, such Strong vs Weak Ties (and other structural dimensions of networks, such

as density, reciprocity, network size)as density, reciprocity, network size) Characteristics of network members (e.g., SES, gender, race/ethnicity, Characteristics of network members (e.g., SES, gender, race/ethnicity,

social roles and expectations)social roles and expectations) Quality of interpersonal relationships (e.g., conflict, trust)Quality of interpersonal relationships (e.g., conflict, trust)

Characteristics such as those above will influence:Characteristics such as those above will influence: The type and quality of information and resources that are transmitted The type and quality of information and resources that are transmitted

across network tiesacross network ties The degree to which networks shape preferences or regulate behaviorThe degree to which networks shape preferences or regulate behavior How motivated network members are to provide information and How motivated network members are to provide information and

supportsupport

Contributions of Social Network Contributions of Social Network Approach to Understanding Child Care Approach to Understanding Child Care

Decision MakingDecision Making Overall, this approach directs attention to the role that social Overall, this approach directs attention to the role that social

relations play in shaping relations play in shaping preferencespreferences, , informationinformation, , choiceschoices, , and actual and actual decisionsdecisions..

Information campaigns Information campaigns about child care and child care about child care and child care assistance will likely be more successful when:assistance will likely be more successful when: the the message is consistent message is consistent with network values and norms, andwith network values and norms, and the campaign strategically the campaign strategically involves social network members involves social network members

to shape and communicate the message to the communities of to shape and communicate the message to the communities of interestinterest

Social networks are critical part of Social networks are critical part of child care supplychild care supply, that , that may be easier to access (because of cost, availability, may be easier to access (because of cost, availability, motivation). Alternative options will have to compare favorably motivation). Alternative options will have to compare favorably to network alternatives in order to be considered.to network alternatives in order to be considered.

Psychological/Behavioral Economic Psychological/Behavioral Economic Approaches to Decision MakingApproaches to Decision Making

Decision-making as studied by psychologists and behavioral Decision-making as studied by psychologists and behavioral economists is concerned with how normal psychological processes economists is concerned with how normal psychological processes interact with social-contextual factors to influence behavior. interact with social-contextual factors to influence behavior.

According to this perspective, According to this perspective, we rely on we rely on heuristics heuristics – cognitive short-cuts – to make decisions.– cognitive short-cuts – to make decisions. In many cases, heuristics result in In many cases, heuristics result in good and efficient decisionsgood and efficient decisions. .

This is especially true, when we have good information and familiarity with This is especially true, when we have good information and familiarity with the situation, and when we receive direct and immediate feedback about our the situation, and when we receive direct and immediate feedback about our decision. decision.

But in other cases, heuristics result in But in other cases, heuristics result in bad decisionsbad decisions, or in , or in no decision no decision (i.e., we accept the default). (i.e., we accept the default). This is especially true when we are unfamiliar with the topic, when good This is especially true when we are unfamiliar with the topic, when good

information is difficult to obtain, and when poor feedback precludes us from information is difficult to obtain, and when poor feedback precludes us from evaluating the consequences of our decisions.evaluating the consequences of our decisions.

Child care decisions may be more likely to fall in this categoryChild care decisions may be more likely to fall in this category

Decisions are Decisions are highly sensitive to the environmenthighly sensitive to the environment. Relatively minor . Relatively minor changes in the environment can have large effects on choices.changes in the environment can have large effects on choices.

Why do we rely on heuristic processing?Why do we rely on heuristic processing?

Central tenet of modern psychology is that Central tenet of modern psychology is that individuals construe individuals construe their environmenttheir environment (Bruner, 1957). These (Bruner, 1957). These mental representationsmental representations – – not the environment itself – influence our attitudes, evaluations, and not the environment itself – influence our attitudes, evaluations, and actions.actions.

Understanding the objective world is difficult and complex: Understanding the objective world is difficult and complex: cognitive limitationscognitive limitations, , motivational considerationsmotivational considerations, , structural structural barriersbarriers, and , and time constraints time constraints require us to make use of require us to make use of simplifying strategies (or heuristics), allowing us to come to simplifying strategies (or heuristics), allowing us to come to reasonable or “satisficing” conclusions (Simon, 1955). reasonable or “satisficing” conclusions (Simon, 1955).

These simplifying strategies lead to These simplifying strategies lead to systematic biases in systematic biases in cognitive processes cognitive processes that affect our decisions.that affect our decisions. Many examples of systematic biases (availability bias, status quo bias, Many examples of systematic biases (availability bias, status quo bias,

category-based judgments, anchoring, and so on).category-based judgments, anchoring, and so on). Psychological biases Psychological biases challenge notion that individuals are rational challenge notion that individuals are rational

actorsactors, in the sense of a traditional economic choice model. They may be , in the sense of a traditional economic choice model. They may be purposive and instrumental in their motivations, but normal psychological purposive and instrumental in their motivations, but normal psychological biases interfere.biases interfere.

Contributions of Psych/Behavioral Econ Contributions of Psych/Behavioral Econ Approach to Child Care Decision MakingApproach to Child Care Decision Making Behavioral economists have applied research knowledge of Behavioral economists have applied research knowledge of

psychological biases and heuristics to program and policy psychological biases and heuristics to program and policy design questions (see Thaler & Sunstein, 2008).design questions (see Thaler & Sunstein, 2008). People need “nudges” to direct them toward the preferred policy People need “nudges” to direct them toward the preferred policy

choiceschoices

Keys to effective policy design:Keys to effective policy design: Make preferred options Make preferred options defaultsdefaults, rather than choices. , rather than choices. Do not provide too many options; Do not provide too many options; fewer is betterfewer is better Simplify Simplify information about eligibility and incentives in policyinformation about eligibility and incentives in policy Minimize hassles Minimize hassles around eligibility and recertificationaround eligibility and recertification Allow mistakes Allow mistakes and correctivesand correctives Provide frequent Provide frequent feedbackfeedback

The types of child care parents use and their use (or not) of The types of child care parents use and their use (or not) of subsidies will depend on what is easiest, most familiar, and subsidies will depend on what is easiest, most familiar, and requires limited change. requires limited change. To change people’s child care choices or to encourage subsidy use To change people’s child care choices or to encourage subsidy use

would require consideration of the policy design issues above.would require consideration of the policy design issues above.

Accommodation Model of Decision Accommodation Model of Decision MakingMaking

Borrows from and elaborates upon Meyers and Jordan (2006).Borrows from and elaborates upon Meyers and Jordan (2006). Decisions are seen as “contextualized patterns of action” that are Decisions are seen as “contextualized patterns of action” that are

understood as parental understood as parental accommodations accommodations rather than rather than choices; choices; more fully more fully elaborates upon and accounts for parental decisions about child care, elaborates upon and accounts for parental decisions about child care, particularly in highly constrained decision environments.particularly in highly constrained decision environments.

Draws from Draws from multiple theoretical traditionsmultiple theoretical traditions including sociology, including sociology, economics, psychology.economics, psychology.

Decisions accommodate market, family, and social realities; reflect Decisions accommodate market, family, and social realities; reflect trade-offs among very diverse aspects of care and between their trade-offs among very diverse aspects of care and between their caregiving and employment roles.caregiving and employment roles.

Alternatives (or “choice sets”) are linked to Alternatives (or “choice sets”) are linked to structural sourcesstructural sources, and are , and are rarely free-standing alternatives.rarely free-standing alternatives.

Model gives significant attention to environmental contexts or Model gives significant attention to environmental contexts or contexts contexts of action of action (e.g. workplace, household, child care center, school, (e.g. workplace, household, child care center, school, neighborhood)neighborhood)

Accommodation Model of Decision Accommodation Model of Decision MakingMaking

Social networks play an important role in accommodation model, Social networks play an important role in accommodation model, particularly that networks as supplier of information and support (care).particularly that networks as supplier of information and support (care).

Places more emphasis on contexts (geographic, organizational) and Places more emphasis on contexts (geographic, organizational) and environment in which decisions are made than network model alone environment in which decisions are made than network model alone does.does.

Considers role of social structure in shaping alternatives.Considers role of social structure in shaping alternatives. Social interactions shape preferences, which are dynamic as a result. Social interactions shape preferences, which are dynamic as a result.

Repeated social interactions within group can create norms or taken-for-Repeated social interactions within group can create norms or taken-for-granted patterns of action and may operate outside the network.granted patterns of action and may operate outside the network.

Consistent with psychological model, builds into the model the idea of Consistent with psychological model, builds into the model the idea of “short-cuts” or “bounded choices”“short-cuts” or “bounded choices”

Allows that decisions can be “purposive,” like in a rational choice model Allows that decisions can be “purposive,” like in a rational choice model but that they need not be (people have multiple motivations and may not but that they need not be (people have multiple motivations and may not be deliberative).be deliberative).

Next Steps: Implications for child Next Steps: Implications for child care research and policy analysiscare research and policy analysis

How we conceptualize child care decision-making has implications for how How we conceptualize child care decision-making has implications for how we design research studies to understand child care choices, how parents we design research studies to understand child care choices, how parents consider quality in child care decisions, and how subsidies may or may not consider quality in child care decisions, and how subsidies may or may not support alternative care choices.support alternative care choices.

Develop robust research designs that recognize both purposive, individual Develop robust research designs that recognize both purposive, individual actions and social contexts of decisions. actions and social contexts of decisions.

Implies using mixed methods approaches well aligned to research questions Implies using mixed methods approaches well aligned to research questions including aspects of decision mechanisms that may be able to be isolated including aspects of decision mechanisms that may be able to be isolated (price change impacts) and generalized among larger populations, and (price change impacts) and generalized among larger populations, and insights about difficult to observe interactions between family and social insights about difficult to observe interactions between family and social processes. Use longitudinal designs to examine transitions and timings of processes. Use longitudinal designs to examine transitions and timings of decisions.decisions.

Consider policy levers that respond to complexity of Consider policy levers that respond to complexity of decision-making process.decision-making process.

Comments/SuggestionsComments/Suggestions

Contact Julia Henly at Contact Julia Henly at jhenly@uchicago.edu

Contact Ajay Chaudry at Contact Ajay Chaudry at achaudry@urban.org