IDEAS home Printed from https://ideas.repec.org/p/cge/wacage/405.html
   My bibliography  Save this paper

The Political Economy of Higher Education Finance: How Information and Design Affect Public Preferences for Tuition

Author

Listed:
  • Lergetporer, Philipp

    (ifo Institute at the University of Munich; CESifo)

  • Woessmann, Ludger

    (: University of Munich and ifo Institute; CESifo, IZA, and CAGE)

Abstract

Public preferences for charging tuition are important for determining higher education finance. To test whether public support for tuition depends on information and design, we devise several survey experiments in representative samples of the German electorate (N>19,500). The electorate is divided, with a slight 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. Information on fiscal costs and unequal access does not affect public preferences. Designing tuition as deferred income-contingent payments raises support by 16 percentage points, creating a strong majority favoring tuition. The same effect emerges when framed asloan payments. Support decreases with higher tuition levels and increases when targeted at non-EU students.

Suggested Citation

  • Lergetporer, Philipp & Woessmann, Ludger, 2019. "The Political Economy of Higher Education Finance: How Information and Design Affect Public Preferences for Tuition," CAGE Online Working Paper Series 405, Competitive Advantage in the Global Economy (CAGE).
  • Handle: RePEc:cge:wacage:405
    as

    Download full text from publisher

    File URL: https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/405-2019_woessmann.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jonathan de Quidt & Johannes Haushofer & Christopher Roth, 2018. "Measuring and Bounding Experimenter Demand," American Economic Review, American Economic Association, vol. 108(11), pages 3266-3302, November.
    2. Dwenger, Nadja & Storck, Johanna & Wrohlich, Katharina, 2012. "Do tuition fees affect the mobility of university applicants? Evidence from a natural experiment," Economics of Education Review, Elsevier, vol. 31(1), pages 155-167.
    3. Glomm, Gerhard & Ravikumar, B. & Schiopu, Ioana C., 2011. "The Political Economy of Education Funding," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 615-680, Elsevier.
    4. Philipp Lergetporer & Katharina Werner & Ludger Woessmann, 2018. "Does Ignorance of Economic Returns and Costs Explain the Educational Aspiration Gap? Evidence from Representative Survey Experiments," CESifo Working Paper Series 7000, CESifo.
    5. Bleemer, Zachary & Zafar, Basit, 2018. "Intended college attendance: Evidence from an experiment on college returns and costs," Journal of Public Economics, Elsevier, vol. 157(C), pages 184-211.
    6. Lergetporer, Philipp & Schwerdt, Guido & Werner, Katharina & West, Martin R. & Woessmann, Ludger, 2018. "How information affects support for education spending: Evidence from survey experiments in Germany and the United States," Journal of Public Economics, Elsevier, vol. 167(C), pages 138-157.
    7. Rainald Borck & Martin Wimbersky, 2014. "Political economics of higher education finance," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 115-139, January.
    8. Haaland, Ingar & Roth, Christopher, 2020. "Labor market concerns and support for immigration," Journal of Public Economics, Elsevier, vol. 191(C).
    9. Grewenig, Elisabeth & Lergetporer, Philipp & Simon, Lisa & Werner, Katharina & Woessmann, Ludger, 2018. "Can Online Surveys Represent the Entire Population?," Rationality and Competition Discussion Paper Series 117, CRC TRR 190 Rationality and Competition.
    10. Stephan Thomsen & Friederike von Haaren-Giebel, 2016. "Did tuition fees in Germany constrain students’ budgets? New evidence from a natural experiment," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-25, December.
    11. Gilens, Martin, 2001. "Political Ignorance and Collective Policy Preferences," American Political Science Review, Cambridge University Press, vol. 95(2), pages 379-396, June.
    12. Armin Falk & Florian Zimmermann, 2013. "A Taste for Consistency and Survey Response Behavior," CESifo Economic Studies, CESifo, vol. 59(1), pages 181-193, March.
    13. Björn Kauder & Niklas Potrafke, 2013. "Government Ideology and Tuition Fee Policy: Evidence from the German States," CESifo Economic Studies, CESifo, vol. 59(4), pages 628-649, December.
    14. Stefanie Stantcheva, 2017. "Optimal Taxation and Human Capital Policies over the Life Cycle," Journal of Political Economy, University of Chicago Press, vol. 125(6), pages 1931-1990.
    15. Alberto Cavallo & Guillermo Cruces & Ricardo Perez-Truglia, 2014. "Inflation Expectations, Learning and Supermarket Prices," NBER Working Papers 20576, National Bureau of Economic Research, Inc.
    16. Zachary Bleemer & Basit Zafar, 2014. "Information heterogeneity and intended college enrollment," Staff Reports 685, Federal Reserve Bank of New York.
    17. Abraham, Katharine G. & Filiz-Ozbay, Emel & Ozbay, Erkut Y. & Turner, Lesley J., 2020. "Framing effects, earnings expectations, and the design of student loan repayment schemes," Journal of Public Economics, Elsevier, vol. 183(C).
    18. Zacharias Maniadis & Fabio Tufano & John A. List, 2014. "One Swallow Doesn't Make a Summer: Reply to Kataria," Econ Journal Watch, Econ Journal Watch, vol. 11(1), pages 11-16, January.
    19. Leonardo Bursztyn, 2016. "Poverty and the Political Economy of Public Education Spending: Evidence from Brazil," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1101-1128.
    20. Cruces, Guillermo & Perez-Truglia, Ricardo & Tetaz, Martin, 2013. "Biased perceptions of income distribution and preferences for redistribution: Evidence from a survey experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 100-112.
    21. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
    22. Nicholas Barr, 2004. "Higher Education Funding," Oxford Review of Economic Policy, Oxford University Press, vol. 20(2), pages 264-283, Summer.
    23. Susan M. Dynarski, 2003. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," American Economic Review, American Economic Association, vol. 93(1), pages 279-288, March.
    24. Lowry, Robert C., 2001. "The effects of state political interests and campus outputs on public university revenues," Economics of Education Review, Elsevier, vol. 20(2), pages 105-119, April.
    25. De Fraja, Gianni, 2001. "Education Policies: Equity, Efficiency and Voting Equilibrium," Economic Journal, Royal Economic Society, vol. 111(471), pages 104-119, May.
    26. Caroline M. Hoxby & Sarah Turner, 2015. "What High-Achieving Low-Income Students Know about College," American Economic Review, American Economic Association, vol. 105(5), pages 514-517, May.
    27. Soares, Jorge, 2003. "Self-interest and public funding of education," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 703-727, March.
    28. Barr, Nicholas & Chapman, Bruce & Dearden, Lorraine & Dynarski, Susan, 2019. "The US college loans system: Lessons from Australia and England," Economics of Education Review, Elsevier, vol. 71(C), pages 32-48.
    29. David Romer, 2003. "Misconceptions and Political Outcomes," Economic Journal, Royal Economic Society, vol. 113(484), pages 1-20, January.
    30. Richard Murphy & Judith Scott-Clayton & Gill Wyness, 2017. "The end of free college in England," CentrePiece - The Magazine for Economic Performance 503, Centre for Economic Performance, LSE.
    31. Adam M. Lavecchia & Heidi Liu & Philip Oreopoulos, 2014. "Behavioral Economics of Education: Progress and Possibilities," NBER Working Papers 20609, National Bureau of Economic Research, Inc.
    32. Erica Field, 2009. "Educational Debt Burden and Career Choice: Evidence from a Financial Aid Experiment at NYU Law School," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 1-21, January.
    33. Zacharias Maniadis & Fabio Tufano & John A. List, 2014. "One Swallow Doesn't Make a Summer: New Evidence on Anchoring Effects," American Economic Review, American Economic Association, vol. 104(1), pages 277-290, January.
    34. Daniel Zizzo, 2010. "Experimenter demand effects in economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 13(1), pages 75-98, March.
    35. Philip Oreopoulos & Uros Petronijevic, 2013. "Making College Worth It: A Review of Research on the Returns to Higher Education," NBER Working Papers 19053, National Bureau of Economic Research, Inc.
    36. Barr, Nicholas, 2004. "Higher education funding," LSE Research Online Documents on Economics 288, London School of Economics and Political Science, LSE Library.
    37. Raquel Fernandez & Richard Rogerson, 1995. "On the Political Economy of Education Subsidies," Review of Economic Studies, Oxford University Press, vol. 62(2), pages 249-262.
    38. Robert Jensen, 2010. "The (Perceived) Returns to Education and the Demand for Schooling," The Quarterly Journal of Economics, Oxford University Press, vol. 125(2), pages 515-548.
    39. Johnstone, D. Bruce, 2004. "The economics and politics of cost sharing in higher education: comparative perspectives," Economics of Education Review, Elsevier, vol. 23(4), pages 403-410, August.
    40. Thomas Lange, 2013. "Return migration of foreign students and non-resident tuition fees," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 703-718, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lergetporer, Philipp & Werner, Katharina & Woessmann, Ludger, 2020. "Educational inequality and public policy preferences: Evidence from representative survey experiments," Journal of Public Economics, Elsevier, vol. 188(C).
    2. Del Rey, Elena & Lopez-Garcia, Miguel-Angel, 2020. "On government-created credit markets for education and endogenous growth," Economic Modelling, Elsevier, vol. 92(C), pages 170-179.
    3. Hügle, Dominik, 2020. "Higher education funding in Germany: A distributional lifetime perspective," Discussion Papers 2021/1, Free University Berlin, School of Business & Economics.
    4. Cattaneo, Maria & Lergetporer, Philipp & Schwerdt, Guido & Werner, Katharina & Woessmann, Ludger & Wolter, Stefan C., 2020. "Information provision and preferences for education spending: Evidence from representative survey experiments in three countries," European Journal of Political Economy, Elsevier, vol. 63(C).
    5. Adams-Prassl, A. & Boneva, T. & Golin, M. & Rauh, C., 2021. "The Value of Sick Pay," Cambridge Working Papers in Economics 2162, Faculty of Economics, University of Cambridge.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Philipp Lergetporer & Ludger Woessmann, 2021. "Earnings Information and Public Preferences for University Tuition: Evidence from Representative Experiments," CESifo Working Paper Series 9102, CESifo.
    2. Katharina Werner, 2019. "Der Einfluss von Informationen auf die öffentliche Meinung zur Bildung - Erkenntnisse aus repräsentativen Befragungsexperimenten," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 82.
    3. Lergetporer, Philipp & Werner, Katharina & Woessmann, Ludger, 2020. "Educational inequality and public policy preferences: Evidence from representative survey experiments," Journal of Public Economics, Elsevier, vol. 188(C).
    4. Ingar Haaland & Christopher Roth & Johannes Wohlfart, 2020. "Designing Information Provision Experiments," CEBI working paper series 20-20, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    5. Werner, Katharina, 2018. "Obstacles to Efficient Allocations of Public Education Spending," Rationality and Competition Discussion Paper Series 128, CRC TRR 190 Rationality and Competition.
    6. Cattaneo, Maria & Lergetporer, Philipp & Schwerdt, Guido & Werner, Katharina & Woessmann, Ludger & Wolter, Stefan C., 2020. "Information provision and preferences for education spending: Evidence from representative survey experiments in three countries," European Journal of Political Economy, Elsevier, vol. 63(C).
    7. Lergetporer, Philipp & Piopiunik, Marc & Simon, Lisa, 2021. "Does the education level of refugees affect natives’ attitudes?," European Economic Review, Elsevier, vol. 134(C).
    8. Philipp Lergetporer & Marc Piopiunik & Lisa Simon, 2017. "Does the Education Level of Refugees Affect Natives' Attitudes?," CESifo Working Paper Series 6832, CESifo.
    9. Elisabeth Grewenig & Philipp Lergetporer & Katharina Werner & Ludger Woessmann, 2019. "Do Party positions affect the public's policy preferences?," CESifo Working Paper Series 7579, CESifo.
    10. Grewenig, Elisabeth & Lergetporer, Philipp & Werner, Katharina & Woessmann, Ludger, 2020. "Do party positions affect the public's policy preferences? Experimental evidence on support for family policies," Journal of Economic Behavior & Organization, Elsevier, vol. 179(C), pages 523-543.
    11. Blesse, Sebastian & Heinemann, Friedrich & Krieger, Tommy, 2021. "Informationsdefizite als Hindernis rationaler Wirtschaftspolitik: Ausmass, Ursachen und Gegenstrategien. Eine Studie mit Unterstützung der Brigitte Strube Stiftung," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 241989, January.
    12. Jordi Jofre-Monseny & Martin Wimbersky, 2010. "Political economics of higher education finance," Working Papers 2010/17, Institut d'Economia de Barcelona (IEB).
    13. Damgaard, Mette Trier & Nielsen, Helena Skyt, 2018. "Nudging in education," Economics of Education Review, Elsevier, vol. 64(C), pages 313-342.
    14. Jesper Akesson & Sam Ashworth-Hayes & Robert Hahn & Robert D. Metcalfe & Itzhak Rasooly, 2020. "Fatalism, Beliefs, and Behaviors During the COVID-19 Pandemic," NBER Working Papers 27245, National Bureau of Economic Research, Inc.
    15. Ingar Haaland & Christopher Roth, 2019. "Beliefs about Racial Discrimination and Support for Pro-Black Policies," CESifo Working Paper Series 7828, CESifo.
    16. Elisabeth Grewenig & Philipp Lergetporer & Katharina Werner & Ludger Woessmann, 2019. "Incentives, search engines, and the elicitation of subjective beliefs: evidence from representative online survey experiments," CESifo Working Paper Series 7556, CESifo.
    17. Philippe De Donder & Francisco Martinez-Mora, 2015. "On the Political Economy of University Admission Standards," Discussion Papers in Economics 15/11, Division of Economics, School of Business, University of Leicester.
    18. Nuarpear Lekfuangfu & Reto Odermatt, 2020. "All I Have to Do Is Dream? The Role of Aspirations in Intergenerational Mobility and Well-Being," PIER Discussion Papers 142, Puey Ungphakorn Institute for Economic Research.
    19. Philipp Lergetporer & Guido Schwerdt & Katharina Werner & Ludger Woessmann, 2016. "Information and Preferences for Public Spending: Evidence from Representative Survey Experiments," Working Paper Series of the Department of Economics, University of Konstanz 2016-07, Department of Economics, University of Konstanz.
    20. Juan A. Correa & Yijia Lu & Francisco Parro & Mauricio Villena, 2020. "Why is free education so popular? A political economy explanation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 973-991, August.

    More about this item

    Keywords

    tuition; higher education; political economy; survey experiments; information; earnings premium; income-contingent loans; voting JEL Classification: I22; H52; D72; D83;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cge:wacage:405. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jane Snape (email available below). General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.