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Information heterogeneity and intended college enrollment

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  • Zachary Bleemer
  • Basit Zafar

Abstract

Despite a robust college premium, college attendance rates in the United States have remained stagnant and exhibit a substantial socioeconomic gradient. We focus on information gaps? specifically, incomplete information about college benefits and costs?as a potential explanation for these patterns. In a nationally representative survey of U.S. household heads, we show that perceptions of college costs and benefits are severely and systematically biased: 74 percent of our respondents underestimate the true benefits of college (average earnings of a college graduate relative to a non-college worker in the population), while 77 percent report public college costs that exceed actual sticker costs. There is substantial heterogeneity in beliefs, with larger biases for the more disadvantaged groups, lower-income and non-college households. We show that these biases are problematic since they (indirectly) impact the respondents? reported intended likelihood of their (pre-college-age) child attending college. We simulate an ?information intervention,? and find that were individuals to be provided with the correct population distribution of college costs and returns, the intended child?s college attendance would increase significantly, by about 0.2 of the standard deviation in the baseline intended likelihood. Importantly, as a result of the simulated intervention, gaps in college attendance by household income or parents? education persist but decline by 30 to 50 percent.

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  • Zachary Bleemer & Basit Zafar, 2014. "Information heterogeneity and intended college enrollment," Staff Reports 685, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednsr:685
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    Cited by:

    1. 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.
    2. Lergetporer, Philipp & Woessmann, Ludger, 2019. "The Political Economy of Higher Education Finance: How Information and Design Affect Public Preferences for Tuition," Rationality and Competition Discussion Paper Series 145, CRC TRR 190 Rationality and Competition.
    3. Ingar K. Haaland & Christopher Roth & Johannes Wohlfart, 2020. "Designing Information Provision Experiments," CESifo Working Paper Series 8406, CESifo.
    4. Haaland, Ingar & Roth, Christopher & Wohlfart, Johannes, 2020. "Designing Information Provision Experiments," CAGE Online Working Paper Series 484, Competitive Advantage in the Global Economy (CAGE).
    5. 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.
    6. Rajeev Darolia, 2016. "An Experiment on Information Use in College Student Loan Decisions," Working Papers 16-18, Federal Reserve Bank of Philadelphia, revised 01 Jun 2016.
    7. Ganguli, Ina & Gaule, Patrick & Čugalj, Danijela Vuletić, 2020. "Biased Beliefs and Entry into Scientific Careers," IZA Discussion Papers 13475, Institute of Labor Economics (IZA).
    8. Ana Figueiredo, 2017. "Uncertainty in education: The role of communities and social learning," 2017 Meeting Papers 529, Society for Economic Dynamics.
    9. 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.
    10. Johannes S. Kunz & Kevin E. Staub, 2016. "Subjective Completion Beliefs and the Demand for Post-Secondary Education," SOEPpapers on Multidisciplinary Panel Data Research 878, DIW Berlin, The German Socio-Economic Panel (SOEP).
    11. Teodora Boneva & Christopher Rauh, 2017. "Socio-Economic Gaps in University Enrollment: The Role of Perceived Pecuniary and Non-Pecuniary Returns," CESifo Working Paper Series 6756, CESifo.
    12. Elisabeth Grewenig & Philipp Lergetporer & Katharina Werner, 2020. "Gender Norms and Labor-Supply Expectations: Experimental Evidence from Adolescents," CESifo Working Paper Series 8611, CESifo.
    13. Estelle Herbaut & Koen Geven, 2019. "What Works to Reduce Inequalities in Higher Education? A Systematic Review of the (Quasi-)Experimental Literature on Outreach and Financial Aid," Sciences Po publications info:hdl:2441/527ht1a96e8, Sciences Po.
    14. Warn N. 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, revised Jul 2020.
    15. Ana Figueiredo, 2018. "Information Frictions in Education and Inequality," 2018 Meeting Papers 804, Society for Economic Dynamics.
    16. Haaland, Ingar & Roth, Christopher & Wohlfart. Johannes, 2020. "Designing Information Provision Experiments," The Warwick Economics Research Paper Series (TWERPS) 1275, University of Warwick, Department of Economics.
    17. Sieuwerd Gaastra, 2020. "Personal Income Taxation and College Major Choice: A Case Study of the 1986 Tax Reform Act," Public Finance Review, , vol. 48(1), pages 3-42, January.
    18. 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).
    19. Bleemer, Zachary, 2016. "Role Model Effects Of Female Stem Teachers And Doctors On Early 20th Century University Enrollment In California," University of California at Berkeley, Center for Studies in Higher Education qt8nq0z4wb, Center for Studies in Higher Education, UC Berkeley.
    20. Frauke H. Peter & C. Katharina Spieß & Vaishali Zambre, 2018. "Informing Students about College: An Efficient Way to Decrease the Socio-Economic Gap in Enrollment: Evidence from a Randomized Field Experiment," Discussion Papers of DIW Berlin 1770, DIW Berlin, German Institute for Economic Research.
    21. Pablo Brañas-Garza; Riccardo Ciacci; Ericka Rascón Ramírez, 2020. "Order Matters: Eliciting Maternal Beliefs on Educational Choices," Economics Working Papers ECO 2020/01, European University Institute.
    22. Feng, Hongli & Wang, Tong & Hennessy, David A., 2017. "Perception Biases and Land Use Decisions," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258571, Agricultural and Applied Economics Association.
    23. 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.
    24. Phillip B. Levine & Jennifer Ma & Lauren C. Russell, 2020. "Do College Applicants Respond to Changes in Sticker Prices Even When They Don't Matter?," NBER Working Papers 26910, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    college enrollment; college returns and costs; information; subjective expectations;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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