Has ChatGPT Disrupted the Education Sector in the U.S.?

The introduction of ChatGPT and other tools based on artificial intelligence (AI) has the potential to revolutionize the field of education. We study how the public release of ChatGPT and the increased attention on this new large language model from OpenAI are associated with the expected returns of publicly traded firms that operate in the education sector. We also perform separate subgroup analyses for the traditional education sector and the so-called education technology sector. Using linear and threshold CAPM-GARCH models, we find that after the public release of ChatGPT, both the education sector as a whole and the education technology sector have underperformed benchmarks. Our results show that increased attention leads to lower next-day returns in the education sector as a whole and the education technology sector in particular. Additionally, during periods of higher attention, expected returns tend to decline in these two sectors. We also show that the introduction of ChatGPT or the increased interest in this AI tool in the population does not affect the traditional education sector. The introduction of ChatGPT thus has a heterogeneous effect across the various education sectors we examine, with the education technology sector receiving most of the disruption.