Category Archives: Economics of Education

Identity: Influence of social interactions on education outcomes

April 30, 2017 By in Behavioural Economics, Economics of Education, Identity Economics Tags: , , , , , , ,

Choices in education by their very nature are dependent upon social interactions. These social interactions are complex and cognitively demanding due the number of variables involved, and problems of incomplete and asymmetric information. Consequently, ‘‘the ability to sort people (or objects) spontaneously and with minimum effort and awareness into meaningful categories is a universal facet of human perception essential for efficient functioning’’ (Bodenhausen, Todd and Becker 2006). A person’s identity defines who they are with regards to their social category, the ‘in-group’ (Akerlof and Kranton 2010). Having a common ‘identity’ in social interactions significantly reduces the amount of information asymmetry present with regards to individuals within the group, thereby decreasing the complexity of decision making.

The same heuristics that are valuable in reducing complexity and cognitive load can also lead to bias-confirming assessments of inter-group relations giving rise to stereotyping. The perception of an individual’s identity status via social cues can reinforce confirmation biases associated with maintaining a state of identity threat (Darley & Gross, 1983). Identity threat is one of the mechanisms that lie behind persistent achievement gaps in education outcomes (females: Spencer et al., (1999); African-Americans: Steele and Aronson (1995); students from low socio-economic backgrounds: Croizet and Claire (1998)). However, being a socially context dependent behaviour, identity is localised and does not persist beyond its context frame. For example, low achieving boys when changing grades experience large gains when leaving behind old identity norms and expectations (Dweck et al., 1978). For an explanation of the decision processes that underlie poor academic achievement due to identity threat (see Cohen & Garcia, 2008). Continue reading →

Self-efficacy and the Pygmalion Effect

April 30, 2017 By in Behavioural Economics, Economics of Education, Evolutionary Economics Tags: , , , , , ,

In any decision involving investments in education there needs to be a consideration of the expected return with respect to expected risk over time. Critically, this requires an assessment of an individual’s own or in the case of parents their child’s ability to achieve an optimal return on their investment in education. The greater the confidence an individual has in achieving a goal, the more resources they will invest. This perception of one’s own ability is called self-efficacy and the greater the belief in one’s self-efficacy the more productive the individual’s efforts (Eden, 1988). However, the complexity of choices in education mean that perceptions are likely to be affected by cognitive biases leading to a problem Benabou and Tirole (2003) termed imperfect self-knowledge.

In this regard, the general availability heuristics (Tversky and Kahneman 1973) play a key role in how individuals resolve information uncertainty and make inferences about their own ability and the perceived ability of others. There are considered to be three general purpose heuristics underlying many intuitive judgements under uncertainty: availability, representativeness, and anchoring with adjustment (Gilovich & Griffin, 2002). These intuitive heuristics are highly efficient decision rules that achieve a good outcome quickly and with little cognitive effort but at the expense of sizeable type 1 errors. For example in social groups, individuals are usually mindful of behaviours that lead to exclusion from a group. Misperceiving a behaviour as leading to ostracism is psychological costly, requiring effort, but is significantly less costly than missing cues that lead to ostracism (Williams, 2007). Continue reading →

Preference stability and choices in education

February 18, 2017 By in Behavioural Economics, Economics of Education Tags: , , , ,

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 PROCESSESchoice-model

Continue reading →

Applying big-data techniques to small-data: Latent Semantic Analysis of interviews investigating reasons for parents’ choice of school

March 3, 2016 By in Economics of Education, Linguistic analysis Tags: , ,

A paper I’m working on at the moment.

Applying big-data techniques to small-data: Latent Semantic Analysis of interviews investigating reasons for parents’ choice of school

ABSTRACT    In economics, preferences are revealed from the measurable attributes of actual choices. However, choices in education are complex. Many factors underlie the decision processes associated with how parents choose a school for their children. In-depth interviews investigating how and why parents choose a particular school for their children suggest that there are a wide variety of attributes playing an important role in this process.  For economic analysis these attributes are not easily identified and measured within a traditional revealed preference framework. In this study I apply latent semantic analysis to a set of 22 open-ended interviews exploring how and why parents choose a particular school for their children to extract latent choice attributes in a measurable form.  Latent semantic analysis is used to elicit key words from these interviews to reveal those attributes  associated with a parent’s actual choice of school. These words, such as ‘encourage’ and ‘support’, represent particular choice mindsets that frame a wide range of possible choice attributes into a smaller bundle of evaluated attributes that can be mapped to a parent’s actual choice.  Latent semantic analysis is used to first calculate the semantic distance between individual interviews and a set of target words.  Semantic distances are then statistically analysed for clustering subject to school-type (such a public, independent, Catholic and government selective). These semantically revealed words can then be analysed in a more traditional economic framework as trade-offs between particular preference attributes. Importantly, this analysis indicates that there exist distinct groups of parents who are motivated by different choice mindsets but ultimately choose the same type of school. Some of the advantages and disadvantages of applying big-data techniques to small-data sets of relatively large open-ended text responses are discussed.

Breaking down the myth that we need competition to make education policy work

November 18, 2015 By in Behavioural Economics, Economics of Education Tags: ,

An article published in The Australian today ‘Push for universities to share students‘ discussed some of my views regarding the lessons we have learnt from deregulating the schools sector and the consequential impact on the ‘market’ dynamics of educational institutions (i.e. how universities behave).  One of the myths put forward as a reason for deregulating fees within the higher education sector in Australia is the (misguided) belief that competition in student fees will lead to institutional diversity.  However, when it comes to experience goods in education, student (parent) risk aversion leads to a strong preference for universities (schools) to offer the largest range of subjects possible given available funds.  This leads to the crowding of efficiencies from specialization and potentially sacrifices educational quality if the competition is intense.

The main driver of student (parent) risk aversion is the high switching costs associated with changing misinformed choices.  This happens a lot with experience goods where there is little opportunity to repeatedly test choices.  Choices in education are completely different to consumer purchases of milk or bread for example.  Where a bad choice is low cost and easily rectified. Continue reading →

ANU Forum on Higher Education Financing

July 29, 2015 By in Economics of Education, Higher Education Financing Tags: , , ,

I will be presenting at the ANU Forum on Higher Education Financing, Friday 13th August 2015, on the topic ‘Should universities have skin in the game?’ based on my Senate submission ‘An Incentive Compatible Model for Higher Education deregulation’

Details on the conference: Continue reading →

Behavioural Education Economics

July 26, 2015 By in Behavioural Economics, Economics of Education Tags: , ,

My academic paper on the ‘Behavioural Education Economics’ is now up on the web.  This will be a chapter in a forthcoming handbook on Behavioural Economics, due out Sep 2016.

ABSTRACT    The purpose of ‘Behavioural education economics’ is to understand the psychological factors influencing student performance and educational choices. One of the key insights of behavioural education economics is that educational decision making is characterised by choices which are usually not repeated and rely heavily on heuristics to solve complex choices in the absence of prior learning. At the heart of behavioural education economics is an understanding that academic outcomes are malleable. That investment decisions associated with education are primarily driven by non-cognitive behaviours and cognitive biases that affect participation in education and subsequently motivations to commit resources to these investments and maintain these choices over time. The focus of this paper will be on three key non-cognitive behaviours associated with choices in education that impact the quality of investments in education: self-control, self-efficacy and identity.

Leaver, S. 2016. Behavioural education economics. Routledge handbook of behavioral economics, ed. R. Frantz, S.-H. Chen, K. Dopfer, F. Heukelom, and S. Mousavi, 379–391.

An ungated version of the paper can be accessed here:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2634331

Problem of rational adaptive behaviour in at-risk youth

July 22, 2015 By in Economics of Education, Experimental Economics Tags: , , ,

Heller, S. B., Shah, A. K., Guryan, J., Ludwig, J., Mullainathan, S., & Pollack, H. A. (2015). Thinking, Fast and Slow? Some Field Experiments to Reduce Crime and Dropout in Chicago (No. w21178). National Bureau of Economic Research.

ABSTRACT This paper describes how automatic behavior can drive disparities in youth outcomes like delinquency and dropout. We suggest that people often respond to situations without conscious deliberation. While generally adaptive, these automatic responses are sometimes deployed in situations where they are ill-suited. Although this is equally true for all youths, disadvantaged youths face greater situational variability. This increases the likelihood that automaticity will lead to negative outcomes. This hypothesis suggests that interventions that reduce automaticity can lead to positive outcomes for disadvantaged youths. We test this hypothesis by presenting the results of three large-scale randomized controlled trials (RCTs) of interventions carried out on the south and west sides of Chicago that seek to improve the outcomes of low-income youth by teaching them to be less automatic. Two of our RCTs test a program called Becoming a Man (BAM) developed by Chicago-area non-profit Youth Guidance; the first, carried out in 2009-10, shows participation improved schooling outcomes and reduced violent-crime arrests by 44%, while the second RCT in 2013-14 showed participation reduced overall arrests by 31%. The third RCT was carried out in the Cook County Juvenile Temporary Detention Center (JTDC) in 2009- 11 and shows reductions in return rates of 21%. We also present results from various survey measures suggesting the results do not appear to be due to changes in mechanisms like emotional intelligence or self-control. On the other hand results from some decision-making exercises we carried out seem to support reduced automaticity as a key mechanism. Continue reading →

Behavioural economics and the complexity of school choice

April 21, 2015 By in Behavioural Economics, Economics of Education Tags: ,

This is the abstract for a seminar I presented to the Victorian Dept. of Education and Training on the 13th April 2015 on behavioural economics and the complexity of school choice.

ABSTRACT  The purpose of this seminar is to present research investigating the decision architecture of how parents choose a school for their children through the lens of behavioural economics. The research focuses on providing insights into the following key questions : To what extent does active choice exist and is there choice inertia? What are the decision rules parents use to overcome complexity and limited opportunities for learning? What are the choice attributes that motivate a parent’s choice of school?  Do parent behave differently when making educational choices for their children compared to other economic decisions? And is there a relationship between the behavioural components of the decision making and the type of school chosen?  The talk will also focus on how behavioural economics can inform research design. Using exploratory interviews of parents to observe economic decision making in the field. Relating these observations back to economic theory to generate possible explanations for choice behaviour. And then subsequently testing these hypotheses by going back into the field and collecting quantitative evidence.  Both the implications of my results and the general application of behavioural economics to education policy will be discussed.

Call for unis to carry HECS loans risk

March 4, 2015 By in Economics of Education Tags: , ,

I was interviewed yesterday on my submission to the Australian Senate inquiry into higher education deregulation.

“Vice chancellors are being disingenuous at the moment. They are freeloading and are comfortable with the government taking all the risk. They need to get out of the sandpit and into the real world,”

The attached pdf is a copy of the resulting article in The Australian today.

Call for unis to carry HECS loans risk

An Incentive Compatible Model for Higher Education deregulation

March 3, 2015 By in Economics of Education Tags: , ,

On Friday I made a submission to the Senate Inquiry into “The principles of the Higher Education and Research Reform Bill 2014, and related matters”.  The submission was accepted and now available for public release (attached).

In summary: “The purpose of this submission is to suggest a model which combines the social equity benefits of Income-contingent Loans with a market design that is ‘incentive compatible’ through an appropriate price discovery mechanism.”

The model seeks to ensure ‘incentive compatibility’ between the social objectives of Income-Contingent Loans and market objectives of returns to investments in education being optimised. Continue reading →

Research Plan – papers to be written based on Survey Results

February 21, 2015 By in Economics of Education, Field Economics Tags: ,

Papers I’m preparing based on results from the School Choice survey

1.  Six rules parent’s use to solve the problem of complexity and uncertainty in school choice

2. Extent to which children participate in school choice

3. Complexity of school choice, joint decision making and the potential for conflict

4. Quantity and Quality of Children: Why parent education trumps wealth

5. Intergenerational stickiness of school choice: An Australian perspective

6. The Alchian-Allen effect in school choice: School travel time and a child’s ability

7. To what extent does active school choice exist in Australia?

8. Determinants of school choice: What motivates parents to choose a particular school?

9. Big-5 personality traits and a parent’s choice of school

10. The value of Field Economics: An exploration of school choice in Australia

11. Hardest decision parents will make: School Choice

12. Social Preferences of Australian Parents & School Choice

Plus I need to submit the following paper soon:

1.  Behavioural education economics

Why research reputation trumps teaching reputation in universities

February 16, 2015 By in Economics of Education Tags: , ,

Submitted to the Journal for Brief Ideas

Why research reputation trumps teaching reputation in universities

In humans we see lekking behaviour in the general rule that people like being around successful people. This is why social A-lists exist. More generally as animal behaviour, a lek is a gathering of individuals for the purposes of competitive display – competitive signalling. For universities, A-list researchers attract other high quality researchers and also crucially high quality teachers. Why is this important for attracting high quality teachers? Academics themselves are generally seen to be sensitive to reputational influences of their peer group. High quality teachers will be hesitant to join to a university who’s reputation is ambiguous (uncertainty as to rank). The solution is to have an unambiguous reputational signal. However, the signal needs to overcome the problems of asymmetric information associated with the observation (‘measurement’) of quality. It is for this reason that research reputation trumps teaching reputation. Research reputation is a less ambiguous signal as a result of the strength of external validation – active peer review in both academic and public domains (media). Teaching reputation is harder to validate outside the university in which it occurs, leading to the problem of asymmetric information.

Leaver S 2015 ‘Why research reputation trumps teaching reputation in universities’ Journal for Brief Ideas, Zenodo,10.5281/zenodo.15414

Survey demographics – School Choice

February 7, 2015 By in Economics of Education, Experimental Economics Tags: ,

The surveys generated a representative spread of parent backgrounds, including age, education level and household income.

parent demographics2

The survey also generated a good spread of secondary school types attended by children. A situation where children in one family attend more than one school type (Mixed) is likely to occur because of 1) individual children gaining selective entry or Continue reading →

‘Determinants of Parent School Choice’ Online Survey – the Results

February 7, 2015 By in Behavioural Economics, Economics of Education, Experimental Economics Tags: ,

This post will provide updated links to results as I post them. Posts will initially focus on straight forward results associated with specific questions, before proceeding onto more complex statistically analysis of relationships between questions. Continue reading →

‘Determinants of Parent School Choice’ Online Survey

November 12, 2014 By in Economics of Education, Experimental Economics Tags: , , , Leave a comment

I’m a PhD student at RMIT investigating the underlying motivations of parent school choice from an economics perspective.  The objective of this research is to understand the behavioural decision rules used by parents in choosing schools for their children.  This survey is anonymous and may take up to 30 mins to complete. A brief bio about myself can be found here.

——————————————– The survey is now closed —————————–

The key focus of this survey is the idea that education is an investment in a child’s future. Consequently, investments in a child’s education (such as school choice) are generally considered to be governed by the same general economic principles that we see in similarly complex decision making. However, parents usually make these decisions with limited time and resources.  This survey seeks to test this assumption by understanding the relationship between school choices and economic behaviour linked to risk and social preferences.  We draw on insights from behavioural economics to test whether decision behaviour is consistent across different types of choices and different contexts in which choices are made. This survey follows on from my qualitative research into school choice (Victoria, Australia).  It also draws on some interesting observations coming out of the linguistic analysis of these qualitative interviews which indicated the potential existence of distinct economic decision types influenced by economic risk and social preferences.  The survey also draws inspiration from Jonathon’s Haidt’s research on how ‘Liberals and conservatives rely on different sets of moral foundations’. The other investigators for this research project are my PhD supervisors Professor Jason Potts, Dr Foula Kopanidis from RMIT’s School of Economics, Finance & Marketing and the research has been approved by RMIT’s Human Research Ethics committee (No.18945).

Submission to Senate Inquiry into Higher Education and Research Reform Amendment Bill 2014

October 8, 2014 By in Economics of Education Tags: , ,

Attached is my submission to the Australian Senate Inquiry into the Higher Education and Research Reform Amendment Bill 2014

PDF: Higher Education and Research Reform Amendment Bill 2014 – Sean Leaver

Senate Inquiry page: Higher Education and Research Reform Amendment Bill 2014

Deregulation of university fees will leave the disadvantaged at greater debt risk

October 1, 2014 By in Economics of Education Tags: , , ,

My article published in The Australian newspaper today:

Deregulation of university fees will leave the disadvantaged at greater debt risk

IF there is one thing we should have learned from the global fin­ancial crisis, it is that free markets, deregulation and government-subsidised debt ultimately end up creating financial bubbles.

Continue reading →

What motivates parents to choose a particular school?

August 23, 2014 By in Economics of Education, Uncategorized Tags: , , , , Leave a comment

To answer this question, 22 parents from Melbourne and regional Victoria, Australia, were interviewed. These parents came from a broad range of middle socio-economic backgrounds.  Parents were sourced through school newsletters or advertisements in local community newspapers. The diversity of this group of parents is provided in the table below.

Demographics

Table 1.Demographics of parents interviewed.

Parents where asked open questions at the beginning of each interview about their children’s education and the school which they attend. A set of specific questions were then asked about when they started to decide on a school, what they thought were positive and negative characteristics of a school, the importance of teaching and academic performance, the culture of the school, and proximity of the school.  Questions were also asked to understand how the parents arrived at a joint decision, whether their children participated in the decision making, and how they went about collecting information in order to choose or evaluate a school.

One part of the interview analysis involved tabulating a list of preferences parents indicated as reasons for choosing, or not choosing, a particular school.  Each interview was then evaluated to generate a list of preferences that were salient for each parent in their school choice decision.

Continue reading →

Universities as an economic ‘club good’ – the importance of research and why some institutions fail

August 6, 2014 By in Behavioural Economics, Economics of Education Tags: , , , , , Leave a comment

Universities are characterised, compared with other tertiary education providers, as having a significant amount of resources dedicated to research activities.  Typically, an elite university will direct 40-50% of its academic resources towards research.  This is despite the fact that university research is cash-flow negative even after all government grants and commercial revenue are taken into account. As a rule, an optimistic expectation would be that for every two dollars spent on research you may get one dollar back as either grants or revenue. Typically, it is closer to 3:1.  The financial viability of universities rests on its ability to generate teaching revenue.  Teaching undergraduates and postgraduate coursework students.  Curiously, a strong link between the university research undertaken and the courses being taught is not necessary to ensure strong student enrolments and financial viability.  The reason for this is the key role research plays in generating strong reputational benefits for the university.

Continue reading →

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