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I examine the consumption and labor decisions of self-employed households when a child goes to college using unique financial transactions data from the linked accounts of small businesses and their owners. Households respond to the increase in education spending by downsizing business production and exiting self-employment. They increase medical and restaurant expenditures and cut back on mortgage payments. While education spending hampers business survival, self-employed parents become wage-earners or enter the gig economy after exiting to meet the financial obligations of sending kids to college.

Although most would agree that we should strive to do good consistently, an open debate in sequential moral behavior is if doing one good deed elicits more good deeds (consistency) or liberates subsequent anti-social behavior (licensing). One attempt (Conway and Peetz, 2012; Study 1) at reconciling contradicting predictions posits conceptual abstraction moderates if past moral deeds elicit consistency or licensing. The authors found recalling moral behavior in the distant past leads to consistency, whereas recalling moral behavior in the recent past leads to licensing. Although cited 355 times, that study’s small sample (N=101) and lack of neutral conditions reduce confidence in the conclusions. Increasing confidence regarding what can elicit consistent virtuosity and attenuate licensing has clear societal value. Therefore, we propose a registered replication and extension (N=3300) with neutral conditions with two main goals: (1) replicate original analyses in a high-powered setting, and (2) disentangle moral consistency, licensing, and compensation.

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