Higher Education
The Economics of Higher Education: Overview of a Vibrant Field
The two-volume collection on "New Directions in the Economics of Higher Education" that Eric Bettinger and I have edited for the "International Library of Critical Writings in Economics" Series at Edward Elgar has just come out. The included 63 seminal papers provide an overview of the vibrant and growing field of the economics of higher education. Our introductory chapter puts the collected papers into the perspective of developments in the wider literature on the economics of higher education over the past decade, covering (I) the returns to education, including the role of higher education in the growing inequality in many countries and exploration into the heterogeneity in returns; (II) college attendance and the ever-growing importance of completion; (III) higher education finance including the impacts of changing costs and subsidies both to institutions and students; (IV) educational production and its relationship to the science of learning; and (V) the market for education including positive models focused on the objective function of colleges and their changing nature.
New Directions in the Economics of Higher Education (edited with E. Bettinger). Cheltenham: Edward Elgar, 2020 [tweet]
Introduction (with E. Bettinger). In: L. Woessmann, E. Bettinger (eds.), New Directions in the Economics of Higher Education, Cheltenham: Edward Elgar, xii-xxxvii, 2020
The Political Economy of Higher Education Finance
Public preferences for charging tuition are important for determining higher education finance. In a couple of papers, we show that the public’s preferences for charging tuition are partly based on beliefs about the university earnings premium and on the specific design of the payment scheme.
In one paper, we devise survey experiments in representative samples of the German electorate (N>15,000) to test whether public support for tuition depends on earnings information. The electorate is divided, with a plurality opposing tuition. Providing information on the university earnings premium raises support for tuition by 7 percentage points, turning the plurality in favor. The opposition-reducing effect persists two weeks after treatment. While there is some evidence of information-based updating of biased beliefs, the effect seems to mainly work through increased salience which triggers reduced consideration of financial constraints when forming preferences for tuition. Information on fiscal costs and unequal access does not affect public preferences. We subject the baseline result to various experimental tests of replicability, robustness, heterogeneity, and consequentiality.
In a companion paper, we show that the electorate’s preferences for using tuition to finance higher education strongly depend on the design of the payment scheme. In representative surveys of the German electorate (N>18,000), experimentally replacing regular upfront by deferred income-contingent payments increases public support for tuition by 18 percentage points. The treatment turns a plurality opposed to tuition into a strong majority of 62 percent in favor. Additional experiments reveal that the treatment effect similarly shows when framed as loan repayments, when answers carry political consequences, and in a survey of adolescents. Reduced fairness concerns and improved student situations act as strong mechanisms.
Income Contingency and the Electorate’s Support for Tuition (with P. Lergetporer). CESifo Working Paper 9520 / IZA Discussion Paper 14991, January 2022 [tweet]
Earnings Information and Public Preferences for University Tuition: Evidence from Representative Experiments (with P. Lergetporer). Journal of Public Economics 226: 104968, 2023 [tweet]
Does Ignorance of Economic Returns and Costs Explain the Educational Aspiration Gap?
The gap in university enrollment by parental education is large and persistent in many countries. In our representative survey, 74 percent of German university graduates, but only 36 percent of those without a university degree favor a university education for their children. The latter are more likely to underestimate returns and overestimate costs of university. Experimental provision of return and cost information significantly increases educational aspirations. However, it does not close the aspiration gap as treatment effects are at least as strong for individuals with university education as for those without. The same patterns prevail in a representative sample of adolescents with and without university-educated parents. Persistent effects in a follow-up survey indicate that participants process and remember the information. Differences in economic preference parameters also cannot account for the educational aspiration gap.
Does Ignorance of Economic Returns and Costs Explain the Educational Aspiration Gap? Representative Evidence from Adults and Adolescents (with P. Lergetporer and K. Werner). Economica 88 (351): 624-670, 2021 [tweet] [video]