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Study-Grant Schemes and Effort: An Economic Model

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  • Darvish-Lecker, Tikva
  • Kahana, Nava

Abstract

This paper extends Becker's basic model on investment in human capital by introducing effort as a decision variable. Based on this extended model we consider the efficiency of two popular study-grant schemes and propose a third which unequivocally increases the student's effort and may thereby resolve the moral hazard problem created by the student's self-interested behavior. In addition, some policy issues concerning conflicts bewteen the students' and the policy-maker's objectives are discussed. Copyright 1990 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Suggested Citation

  • Darvish-Lecker, Tikva & Kahana, Nava, 1990. "Study-Grant Schemes and Effort: An Economic Model," Bulletin of Economic Research, Wiley Blackwell, vol. 42(3), pages 229-239, July.
    • Handle: RePEc:bla:buecrs:v:42:y:1990:i:3:p:229-39
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    Cited by:

    1. Rosemary Walker & Liviu Florea, 2014. "Easy-Come-Easy-Go: Moral Hazard in the Context of Return to Education," Journal of Business Ethics, Springer, vol. 120(2), pages 201-217, March.
    2. Bodvarsson, Orn B. & Walker, Rosemary L., 2004. "Do parental cash transfers weaken performance in college?," Economics of Education Review, Elsevier, vol. 23(5), pages 483-495, October.

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