Table 10.

Correlation between MSE Latent Variables and HOME Score

Variable	Both		Subjective Probability		Age Range
Standardized μi,ψ,1	−0.024 (0.081)	−0.002 (0.074)	−0.095 (0.080)	−0.058 (0.074)	−0.014 (0.059)	0.031 (0.053)
Standardized μi,ψ,2	0.167*** (0.045)	0114*** (0.039)	0.119*** (0.043)	0.098** (0.040)	0.170*** (0.045)	0.083** (0.038)
Standardized μi,ψ,3	−0.086 (0.067)	0.010 (0.061)	−0.040 (0.066)	0.034 (0.062)	−0.058 (0.048)	−0.014 (0.042)
Demographic variables included	No	Yes	No	Yes	No	Yes
Observations	687	687	687	687	687	687
R 2	0.037	0.270	0.034	0.271	0.031	0.265

Notes: This table shows the correlation between the measure of investment (the Home Observation for the Measurement of the Environment – HOME scores) and the MSE parameters. We find that the MSE parameter about the elasticity of child development with respect to investment - μ_i,ψ,2 – consistently predicts variation in the HOME score. In these regressions, we include the following control variables: a dummy variable takes the value of 1 if the mother’s year of birth is between 1978 and 1987 and 0 otherwise; a dummy variable takes the value of 1 if the mother’s year of birth is between 1988 and 1997 and 0 otherwise; a dummy variable takes the value of 1 if the mother is Hispanic and 0 otherwise; a dummy variable takes the value of 1 if the mother is non-Hispanic black and 0 otherwise; a dummy variable takes the value of 1 if the mother has at least a college degree and 0 otherwise; a dummy variable takes the value of 1 if the mother is married and 0 otherwise; a dummy variable takes the value of 1 if the maternal score on the CESD is greater than or equal to 16 and 0 otherwise; three dummy variables indicate the level of household income. Appendix Table C7 displays all of the estimated coefficients and their robust standard errors.

^*p < 0.10,

^**p < 0.05,

^***p < 0.01