Professor of Economics, Yale University
Founder of TetherEducation & ConsiliumBots

In my previous post, I explored how AI Agents can be expected to have big effects on peoples lives just by reducing procedural barriers in access to social services like education. Helping families navigate complex education subsidies and applications has been shown to have real impact for access and measurable effects on human capital accumulation.

Now, I want to discuss another crucial role AI can play in education markets —empowering people to make more informed, strategic decisions about investing in their own human capital. This is not about reducing costs of doing something you already wanted to do, its helping people know what to do and why they should consider doing it.

Human Capital Decisions: High Stakes, High Complexity

Choosing what skills or education to invest in is among the most consequential decisions individuals make. Decisions about majors, training programs, or vocational tracks significantly influence lifetime earnings, career trajectory, and personal fulfillment. With education getting “unpacked” into online courses and certifications, the right sequence of courses can be difficult. Yet these decisions are complicated by vast amounts of information, uncertainty about outcomes, and cognitive biases.

My research, including the paper "Majors Matter," highlights that what individuals study has profound causal effects on their future earnings. For instance:

• STEM majors typically see significantly higher earnings compared to humanities majors, controlling for other factors.

• Early career decisions regarding internships or skill certifications can create lasting differences in career outcomes and earning potential.

However, making the optimal choice is challenging without detailed, personalized information. It’s nearly impossible for any individual to accurately anticipate future labor market conditions, potential career paths, and income trajectories without assistance.

The Problem Isn't Just Information Availability—It’s Biased Beliefs

Providing more information online or in accessible formats alone isn't sufficient. My recent research, including "Search and Biased Beliefs in Education Markets," demonstrates that people often don't realize they are misinformed or underestimate the value of additional search:

• Families frequently underestimate or overestimate critical factors, such as the actual costs of attending a particular institution or the likely future earnings associated with certain majors.

• Individuals typically stop searching for information prematurely because they incorrectly assume they already have sufficient knowledge.

For example, many students and families significantly overestimate the tuition cost of attending a college like Yale or underestimate the earnings potential associated with majors such as computer science or nursing.

Why AI Agents will be a Game-Changer

AI Agents can proactively help by:

• Identifying gaps in an individual’s understanding of education options and potential outcomes.

• Guiding the search for relevant and tailored information, ensuring individuals learn not just what they explicitly seek, but also uncover critical insights they didn't know existed.

• Personalizing recommendations based on detailed, real-time labor market data, educational costs, and individual preferences.

Instead of passively providing information, AI Agents actively engage users, asking critical questions and guiding them toward informed decisions.

Evidence-Based Impact

Studies have consistently shown that personalized, well-timed information significantly influences education decisions and long-term outcomes:

• Providing students personalized projections of earnings by major leads to substantial shifts in major selection, aligning choices more closely with labor market realities.

• Correcting biased beliefs through timely, targeted information dramatically improves students’ decision-making processes, reducing costly mistakes and improving lifetime earnings.

AI-Enhanced Human Decision-Making

Ultimately, AI Agents don’t replace decision-making—they enhance it. By combining advanced data analysis with behavioral economics insights, these digital assistants empower individuals to make informed choices, maximizing their educational investments and economic potential.

In short, AI isn’t just reducing friction—it’s reshaping how we invest in ourselves, ensuring better outcomes, greater efficiency, and enhanced equity in education markets.

Are you working at the intersection of AI and informed human capital decisions? I'd love to hear your experiences and insights. Share your thoughts in the comments or reach out directly.

This is the first in a series exploring how AI can transform access to education services

Most discussions about AI in education focus on its potential impact on learning, classrooms, and teachers. A quick scroll through LinkedIn or Twitter offers numerous perspectives on these questions. Yet, one of the most powerful and immediately actionable ways AI Agents will impact education is by changing how families access education services and subsidies already available to them.

Across educational services—from childcare to higher education and job training—government programs aim to expand opportunities by subsidizing access or providing services directly. However, despite these good intentions, programs frequently fail to reach the individuals who need them most. Research consistently demonstrates that complexity and bureaucratic hurdles create substantial barriers and reducing them is one of the most cost effective ways to improve efficiency and equity in education markets.

Education as a High-Friction Market

Educational services are delivered in what can be characterized as "high-friction" markets, where transactions between service providers and families involve significant informational, procedural, and psychological costs. These include:

• Complex eligibility criteria

• Opaque application processes

• Poorly communicated or inaccessible information

• High cognitive and time demands for completing procedures

• Lack of transparency regarding costs and benefits

These frictions disproportionately impact vulnerable families, limiting the equity and effectiveness of education policies.

FAFSA: A Canonical Example

In the United States, applying for federal student aid involves completing the FAFSA, a detailed form requiring household income and tax information. Although not extremely difficult, it presents enough complexity to deter some families from completing it.

A landmark H&R Block RCT study “The Role of Application Assistance and Information in College Decisions: Results from the H&R Block Fafsa Experiment” by Eric Bettinger, Bridget Long, Philip Oreopoulos, and Lisa Sanbonmatsu demonstrated the powerful impact of removing these procedural frictions. In their randomized trial, H&R Block professionals assisted low-income families in completing the FAFSA using their tax returns.

🎯 The result? Students who received help were significantly more likely to enroll in college and secure financial aid. Simply removing a friction, a procedural barrier of minor cost or relevance - led individuals to make one of their biggest finanial decisions in their live. Many studies followed finding similar results where reducing seemingly small frictions led to important improvements in access to education. Unfortunatly, changes to policy design have been slow. Its been more than a decade since the FASFA H&R Block study was published and there has been only limited success in simplifying the process (although some progress was made).

Beyond FAFSA: AI Agents as Navigation Infrastructure

Replicating a H&R Block representative is at the top of my list for AI Agents. It is the perfect example of a scalable application for an Agent to help an individual blow through a tedious and potentially confusing but straightforward process.

However this concept translates to many other contexts where families are trying to get access to education services and subsidies1:

📌 Schooling vouchers or Education Savings Accounts (ESA)
📌 Common application and assignment systems
📌 Head Start/Childcare assistance application and waitlists

AI Agents can serve as critical navigation tools—providing tailored, real-time assistance by:

• Clearly explaining eligibility rules

• Pre-filling and completing forms

• Tracking deadlines and sending reminders

• Navigating complex workflows

• Personalizing information based on user context

• Communicating effectively family preferences to strategic assignment algorithms

These agents function as scalable digital caseworkers, leveraging sophisticated AI models to dynamically support users building on decades of research in behavior economics and market design.

Stumbling Block: Integrating with Legacy Public Systems

AI Agents designed to facilitate access to government-subsidized services face significant integration challenges when interacting with legacy public-sector platforms. These older government systems typically lack modern APIs and are often not designed to allow secure authorization tailored specifically for AI-driven intermediaries acting on behalf of families. Persuading policymakers and platform administrators to update authentication processes to accommodate automated Agents remains a substantial stumbling block. A complementary approach employs AI Agents in collaboration with families, guiding them through these legacy platforms step-by-step. These browser Agents do not fully automate interactions due to authorization constraints, but they effectively support families by simplifying navigation and making sure families do not get “stuck” at critical nodes of the process.

Implementation and Evaluation : App/Enroll Agents:

At TetherEd we’re excited to be working with researchers Sebastian Otero of Columbia University and Claudia Allende of Stanford GSB to pilot an innovative AI Agent initiative with the school district SLEP del Pino in Santiago, Chile. With the support of OpenAI Economics Unit, we are implementing AI agents that represent individual schools, assisting families with digital applications, form completion, waitlist updates, and real-time slot availability. Agents fully manage the entire application and enrollment process digitally and help families along the way to make sure everyone can get access.

Working together with the director Pablo Araya of SLEP del Pino and the researchers, , a randomized controlled trial (RCT) will be implemented to compare schools equipped with AI Agents to those without. Importantly, these schools already have digital application and enrollment, so this study isolates the value added by the Agent in addition to digitalization of procedures.

The evaluation focuses on equity in access, operational efficiency, waitlist processing speeds, and overall enrollment rates. Early expectations are that these AI Agents will significantly reduce digital divides, enhancing the ability of less digitally savvy families to successfully apply and enroll. We also expect overall capacity use will increase.

This pioneering pilot, pending further funding, aims to expand to a city in Colombia either Medellín or Cali in 2025 to evaluate external validity of the results. In 2026, the plan is to evaluate the equilibrium effects of AI Agents at scale and to do so, the RCT will expand to 1000 schools in Santiago.

This post is the first in a three-part series exploring AI Agents effect on access to education:

1. Getting Access: Navigating Access Workflows

   Simplifying multistep procedures by filling out forms, tracking deadlines, sending reminders, and helping families access existing education services and subsidies.

2. Getting Access to the Right Education: AI Agents and Information Inequality Providing personalized information about education options, correcting biases, and improving access to critical information to help choose investments in human capital.

3. Tide that Lifts All Boats: Equilibrium Effects of Reducing Frictions at Scale How AI-driven platforms will make demand more elastic to education quality, fostering competition and overall improvements in service delivery for everyone.

Are you working on improving access to public services through technology? I'd love to hear from you. Share your experiences in the comments or reach out directly.

Throughout my career, I've explored how education markets work — and often fail to deliver. I’ve seen how well-intentioned policies can create inefficiencies, inequities, and unnecessary complexities, especially impacting underserved communities. At the same time, I've witnessed firsthand how smart market design, technology-driven innovations, and thoughtful government policy can transform these markets and significantly improve people's lives.

Having worked in government, academia, non-profits, and now as a startup founder, I have tried to make access to education more efficient and equitable. My research has shown that blending technology with economic insights generates solutions that reliably "work." Advising policymakers taught me that progress through government channels, though slow and sometimes frustrating, can yield substantial impact. On the flip side, the startup world offers a fast-paced and flexible environment, although launching and scaling solutions come with significant challenges.

On this Substack, expect me to nerd out on the industrial organization of education markets, digital platforms, and AI. I'll also openly share - and sometimes rant - about the trials and tribulations of collaborating with governments across Latin America, Europe, and the US.

My goal here is simple: to share ideas and experiences that can enhance equity, efficiency, and productivity in education markets—creating systems that truly benefit everyone.

What to Expect:

• Accessible Economics: Clear, understandable explanations of market design and public policy in education markets.

• Real-world Examples: Case studies from my ongoing projects in the US, Latin America, and beyond.

• Tech Insights from an Economics Perspective: Insights into AI-driven solutions aimed at social good.

• Policy Bloopers: Stories of how good policy intentions sometimes lead to unexpected and chaotic outcomes when politicians announce initiatives and someone has to implement them.

I'll post regularly—aiming for 2 thoughtful pieces each month. Subscription is free—join now to stay updated!

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Excited for the conversations ahead,

Chris

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