ABC Radio National segment on choosing schools

I was interviewed on ABC Radio National about my research into how parents choose schools for their children. The radio segment Navigating the seas of schooling aired on Thursday 9th February 2017.  The ABC interviewed a number of researchers about choosing schools in Australia and their interest in my research focused on the behavioural economics of choosing schools.  In particular, how parents solve what is an inherently complex choice process limited time and information.

The ABC RN program link Navigating the seas of schooling provides a full audio podcast.

 

Six keys to making high school choices

An article on my research in the Sun Herald, Sydney, 7 Aug 2016

Understanding the behavioural economics behind choosing a school can save parents a lot of time, writes JAMES MELOUNE

Education is the bedrock of a prosperous society. However the responsibility for getting education “right” and wealth of school choices can be bewildering for some parents.

The behavioural economics behind decisions parents make has prompted Sean Leaver, a former banker, to survey parents. Leaver, a PhD candidate at Melbourne’s RMIT University, has surveyed more than 800 families. His thesis, Behavioural Economics and the Complexity of School Choice, has found there are six keys to high school choice.

1.        PRIORITISE CRITERIA

Leaver’s study found that parents fall into one of five groups, based on what they feel is most important for their child’s development. Continue reading

Behavioural economics and the complexity of school choice

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.

The complexity of educational choices made by parents for their children

At a high level, choice decisions relate to trade-offs between consumption and savings, now and across subsequent time periods subject to constraints and uncertainty.  For parents, educational choices for their children are constrained by the parents’ income, time and regulations, and subject to high levels of uncertainty over very long time frames. Parental choice relating to investments in their children’s education only really occurs in the broad range of the socio-economic ‘middle class’. For the very wealthy, choice is the default of ‘only the best’ which requires little to no effort in decision making despite the cost of the education itself. Parents in low socio-economic conditions lack both the time and experience to research education options and the monetary resources to capture opportunities as they arise, leading to an acquiescence to the default choice of no action.

Rational choice theory suggests that parents are utility maximisers who make decisions from clear value preferences and can be relied upon to make decisions in the best interests of their children (Becker & Tomes 1976, 1979). Yet in deciding which school a child should attend, under rational choice conditions, a parent is required to make a series of complex intergenerational and intertemporal choices that would challenge seasoned economists. Educational choices are predominantly path dependent, subject to imperfect information and in most cases irreversible. Ordinary parents however, need to make these decisions with little training and with limited time to evaluate options. Instead, parents rely on a suite of behavioural heuristics in order to achieve a good outcome for their children.  Individual choice is also context dependent, subject to the experiences of parents, their expectations of the future, a duty to their children and emotional attachment.

How can a parent make optimal decisions in the face of so many possible choices and outcomes? Choices which are necessarily sequential and irreversible once made. To overcome the complexity of choice, humans have developed decision strategies which allow shortcuts to be taken to achieve a ‘good’ outcome in the face of incomplete information and limited time for evaluation. These heuristics, intuitive decision rules, allow mathematically hard problems to be solved under restrictive conditions where a good outcome is achieved at the expense of a perfect outcome. For a parent, a perfect outcome is only possible by chance and impossible by deliberate calculation.

While heuristics are ‘quick & dirty’ solutions, they draw on highly sophisticated underlying processes. Tversky & Kahneman (1983) testing the conjunction rule in likelihood rankings using the classic ‘Bill & Linda’ experiments showed that there was no difference between naïve and sophisticated participants. Experiments undertaken by Gigerenzer & Goldstein (1996) tested the effectiveness of fast and frugal decision heuristics, such as ‘take the best, ignore the rest’, against sophisticated statistical estimation strategies, such as Bayesian networks. Their research showed that fast and frugal heuristics did not fall too far behind a Bayesian network approach. More interestingly, as the quality of available information used for estimation decreased, heuristic strategies became more effective when compared with the more sophisticated strategies.

The complexity of the decision architecture associated with making choices, combining both rational choice and behavioural components, is illustrated in the ‘Choice Process’ diagram below:

The Choice Process

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Becker, G. S., & Tomes, N. 1976. Child Endowments and the Quantity and Quality of Children. The Journal of Political Economy, 84(4), S143-S162.

Becker, GS & Tomes, N 1979, ‘An equilibrium theory of the distribution of income and intergenerational mobility’, The Journal of Political Economy, 1153-1189.

Tversky, A & Kahneman, D 1983, ‘Extensional versus intuitive reasoning: The conjunction fallacy in probability judgment’, Psychological review, 90(4), 293.

Gigerenzer, G & Goldstein, DG 1996, ‘Reasoning the fast and frugal way: models of bounded rationality’, Psychological review, 103(4), 650.

McFadden, D 2001 ‘Economic Choices’, The American Economic Review 91(3): 351-378.

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