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Relevance Of Utility Maximization In Student University Choice – A Consumption-Based Model For Higher Education

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  • Eric S. SCHWARTZ

    ()
    (Virginia Tech, Department of Educational Leadership and Policy Studies, Blacksburg, Virginia, USA)

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    Abstract

    This paper applies a model of utility-maximization to better understand the university choice process. Student decision-making for university choice is conceptualized as a purchase decision process through which students weigh the costs of colleges or universities they choose against their perceived benefits of attending these institutions. The key issues are the impact of consumer’s preferences, income, tuition, and costs in college decision-making. From this perspective, the paper describes the relationship between utility maximization and educational demand, effects of tuition increases, tuition discounting, and financial aid subsidies on university choice. A decision-making scheme for educational consumption is used in order to identify the stages of the university choice process and to predict the behavior of consumers in the higher education marketplace. The analysis points to the need to better inform students about the cost of postsecondary education which is a highly relevant aspect in the university choice process.

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    File URL: http://rebs.ro/resource/REBS_7/Research%20Paper/Schwartz,E-RELEVANCE%20OF%20UTILITY%20MAXIMIZATION%20IN%20STUDENT%20UNIVERSITY%20CHOICE.pdf
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    Bibliographic Info

    Article provided by Alexandru Ioan Cuza University, Faculty of Economics and Business Administration in its journal Review of Economic and Business Studies.

    Volume (Year): (2011)
    Issue (Month): 7 (May)
    Pages: 157-177

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    Handle: RePEc:aic:revebs:y:2011:i:7:schwartze

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    Postal: Universitatea Al. I. Cuza; B-dul Carol I nr. 22; Iasi
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    Related research

    Keywords: College choice; consumer behavior; higher education; human capital; student-choice model;

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    1. V. Joseph Hotz & Peter Arcidiacono & Songman Kang, 2010. "Modeling College Major Choices Using Elicited Measures of Expectations and Counterfactuals," Working Papers 10-30, Duke University, Department of Economics.
    2. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    3. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
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