Biases and Willingness to Take a Student Loan: A Behavioral Economics Approach

This study's primary objective is to analyze the impact of behavioral economics biases on students' inclination to apply for a loan. A 2x2x2 factorial model was utilized, incorporating two levels of framing (positive or negative), two levels of need for a loan (present bias or no bias), and two levels of probability of time limit (high or low probability). The independent variables include positive framing, an urgent need for a loan, and an increased likelihood of time limit. In contrast, the dependent variable is the willingness to take out a student loan. A random sample of 400 students from Ilam and Allameh Tabatabai University was included in the study. The results indicate that the present bias significantly increases the willingness to apply for a loan, suggesting that the perceived urgency of the loan influences individuals' decisions. However, the positive frame variable does not independently impact the overall sample's willingness to apply for a loan. Further analysis demonstrated that positive framing, with a low probability of time limit and absence of bias, positively affects the inclination to take out a loan. This implies that in situations where students are not biased, positive framing significantly influences their decision-making process. The findings of this research provide valuable insights for policymakers in higher education, emphasizing the need to leverage behavioral economics strategies to motivate students to avail themselves of available financial resources