One of the unique problems of choices in education is the length of time between a choice being made and completion of the choice. For instance, when choosing a school the choice remains active from the time a child enters school until they finish many years later. In this way choices in education are more complicated than those normally associated with experience goods. Characteristics of choices made may change over time as the child grows. The choice needs to be continuously experienced in order make judgements about whether it is the ‘right’ choice.
ENDOGENEITY IN CHOICE PROCESSES
Choices in education have similarities with credence goods with long lead times between experiencing a choice and being able to observe its outcomes. However, the key problem of credence goods focuses on asymmetries in expertise and the time it takes to judge the quality of that expertise. These problems can arise in education and we see them frequently where education providers either over-service or short-change on quality.
Both experience and credence goods assume stable preferences and that the key problems are uncertainty and information asymmetry. However, choices in education also give rise to problems that extend beyond those of experience and credence goods. Because choices in education are continually being experienced over long time frames – parents remain immersed in the choice space, continually revaluating whether they have made the ‘right’ choice – it is possible that changes in preference mindsets will arise. This can result in initial ‘right’ choices transforming into ‘wrong’ choices even though the objective outcomes arising from the choice have remained the same. Preferences may change because a parent’s, or child’s, perceptions and beliefs evolve over time. Consequently, there is no guarantee that the ‘success criteria’ for a choice will remain stable over time while the choice is being experienced.
Choices in education also give rise to problems of endogeneity where choices made shape a person’s perceptions and beliefs. This is where preferences evolve over time not from the simple updating of newly acquired information but from the simple act of experiencing the choice. Cognitive dissonance is a classic behavioural bias where preference for a choice is positively reinforced and strengthened over time through the process of ‘rationalising’ that it was/is a ‘good’ choice. Conversely, perceptions of scarcity (grass is greener elsewhere) may lead individuals to increasingly doubt their choice and prefer the choices others have made.