To gain or not to lose? Tuition fees for loss averse students
We model the educational choice of students whose objectives in terms of salary are conditioned by their social origins. We assume that students from a poor background have a lower reference point than students with wealthier origins. We then study the efficiency of a policy of tuition fees as a mechanism to select students on the basis of their academic abilities. We show that, even in the absence of borrowing constraints, the optimal policy consists in lowering tuition fees for poorer students: since prospective students from a disadvantaged background perceives the possibility of joining the university as a gain, they have a tendency to act too cautiously compared to students with higher aspirations, who are ready to take risky choices in order to avoid what they perceive as a failure, i.e. not joining the university.
|Date of creation:||01 Jan 2015|
|Publication status:||Published in Economics Bulletin, Economics Bulletin, 2015, 35 (2), pp.1005-1019|
|Note:||View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01345548|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Epple, Dennis & Figlio, David & Romano, Richard, 2004.
"Competition between private and public schools: testing stratification and pricing predictions,"
Journal of Public Economics,
Elsevier, vol. 88(7-8), pages 1215-1245, July.
- Dennis Epple & David Figlio & Richard Romano, 2000. "Competition Between Private and Public Schools: Testing Stratification and Pricing Predictions," NBER Working Papers 7956, National Bureau of Economic Research, Inc.
- Betts, Julian R, 1998. "The Impact of Educational Standards on the Level and Distribution of Earnings," American Economic Review, American Economic Association, vol. 88(1), pages 266-275, March.
- Robert J. Gary-Bobo & Alain Trannoy, 2008. "Efficient Tuition Fees and Examinations," Journal of the European Economic Association, MIT Press, vol. 6(6), pages 1211-1243, December.
- del Rey, Elena & Romero, Laura, 2004. "Prices versus Exams as Strategic Instruments for Competing Universities," Working Papers of the Department of Economics, University of Girona 12, Department of Economics, University of Girona.
- Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
- repec:hal:cepnwp:hal-00749625 is not listed on IDEAS
- David Flacher & Hugo Harari-Kermadec, 2013. "Tuition fees, self-esteem and social heterogeneity," Education Economics, Taylor & Francis Journals, vol. 21(2), pages 191-210, March.
- Raquel Fernandez, 1998. "Education and Borrowing Constraints: Tests vs. Prices," NBER Working Papers 6588, National Bureau of Economic Research, Inc.
- Fernández, Raquel, 1998. "Education and Borrowing Constraints: Tests Vs. Prices," CEPR Discussion Papers 1913, C.E.P.R. Discussion Papers.
- Fernandez, R., 1998. "Education and Borrowing Constraints: Tests vs Prices," Working Papers 98-17, C.V. Starr Center for Applied Economics, New York University.
- Léonard Moulin, 2014. "Une hausse des frais d'inscription en France est-elle inéluctable ou même simplement souhaitable ?," Post-Print hal-01345565, HAL.
- Léonard Moulin, 2014. "Une hausse des frais d’inscription en France est-elle inéluctable ou même simplement souhaitable ?," Post-Print halshs-01094045, HAL.
- Lionel Page, 2005. "Des inégalités sociales aux inégalités scolaires. Choix éducatifs et Prospect Theory," Revue économique, Presses de Sciences-Po, vol. 56(3), pages 615-623.
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- David Flacher & Hugo Harari-Kermadec & Léonard Moulin, 2012. "Faut-il (vraiment) augmenter les frais d'inscription à l'université ?," Revue française d'économie, Presses de Sciences-Po, vol. 0(3), pages 145-183.
- David Flacher & Hugo Harari-Kermadec & Léonard Moulin, 2012. "Faut-il (vraiment) augmenter les frais d'inscription à l'université ?," Post-Print hal-00749625, HAL.
- Hsieh, Chang-Tai & Urquiola, Miguel, 2006. "The effects of generalized school choice on achievement and stratification: Evidence from Chile's voucher program," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1477-1503, September.
- Raquel Fernández & Jordi Gali, 1999. "To Each According to …? Markets, Tournaments, and the Matching Problem with Borrowing Constraints," Review of Economic Studies, Oxford University Press, vol. 66(4), pages 799-824. Full references (including those not matched with items on IDEAS)