Choosing the future: economic preferences for higher education using discrete choice experiment method

This study illustrates how respondents’ stated choices (the discrete choice experiment method) combined with the random utility framework can be used to model preferences for higher education. The flexibility offered by stated preference data circumvents limitations of other approaches, and allows quantifying young people’ preferences for selected attributes of higher education programs that are typically highly correlated in revealed preference data. The empirical study presented here is based on a survey of 20,000 Polish respondents aged 18-30, who stated their preferences for higher education programs in carefully prepared hypothetical choice situations. The attributes we considered include tuition fee, expected salary after graduation, quality of institution, interest in the field of study, distance from home, and mode of study. Using random parameters and latent class mixed multinomial logit models, we can formally describe young peoples’ preferences, and identify the financial trade-offs they are willing to make, that is, estimate their willingness to pay for specific attribute levels in terms of increased tuition fees or expected salary after graduation. Accounting for respondents’ observed and unobserved preference heterogeneity, we address a few research questions related to, for example, distinct preferences of students whose neither parent attained tertiary education, students from lower socio-economic groups, or students of a particular gender. Overall, we demonstrate how stated preference methods can be a useful tool for exploring economic preferences, better understanding the determinants of choices, forecasting, and designing the services offered by higher education institutions in an optimal way.