Social preferences of Australian parents

The Australian (conservative) government has finally embraced the Gonski school funding reforms. For those outside Australia, ‘Gonski’ (named after David Gonski who lead the review) is a ‘needs based funding model’ where schools with low socio-economics student cohorts receive more funding than comparative schools with a cohort of higher socio-economic students.  Gonski was originally implemented by the previous Labor government and has proven to be extremely popular with the electorate. Even though up to 30% of students in some states (for example Victoria) attend private schools.

Australia has a ‘universal voucher’ system where funding is on a per student basis out of national taxes. Via state governments for public schools and directly for private schools.  Consequently, private schools in Australia are partly funded by the government plus additional fees paid by parents.

It is interesting given Australia’s flexibility in school choice – mixing public and private education – that there is very strong support for a funding model that re-balances natural inequities within an education system due differences in wealth.  In contrast to the USA where electoral support for a progressive funding model for education seems to be lacking. The difference between Australia and the USA may have something to do with the social preferences of parents.

Social Preferences

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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.


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

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

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.

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.

Research Plan – papers to be written based on Survey Results

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

Survey demographics – School Choice

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

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

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).

What motivates parents to choose a particular school?

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.


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.

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Results from school choice interviews – Switching schools

Switching school type – primary to secondary school

Of the 22 parents interviewed, nine families (41%) changed the type of school their children attended between primary and secondary school.  Most of these changes, five families, were from public schools to independent schools.  Two families enrolled their children in selective public schools and two families made the decision to change from a Catholic primary school to a public secondary schools. The change from Catholic public primary schools to public secondary schools was largely motivated by strong preferences for a co-education school environment.  Catholic secondary tend to be predominantly single sex schools.

Switching School - ChildSwitching schools – parents’ and children’s secondary school attended

In general choices followed the academic background of the parents.  Choices where changed either when parent schooling experience was negative or a salience characteristic of the parent school experience was missing.  For example, negative experiences from attending a regional public school leading to a preference independent school education or the absence of co-educational choice at Catholic schools leading to a change to public or independent schools.

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School choice: a qualitative exploration of behavioural decision rules involved in parental investment in education

I will be presenting this seminar/paper at Monash University, Melbourne, Thu 4 Sep 2014

School choice: a qualitative exploration of behavioural decision rules involved in parental investment in education

ABSTRACT: This seminar explores the decision architecture used by parents in choosing secondary schools for their children. I describe the preferences, concerns and constraints faced by 22 parents from across public, independent and Catholic school segments in Victoria, Australia, based on face-to-face interviews.  In particular I will focus on the complexity of the decision process faced by parents in choosing a school for their children, the potential for conflict, uncertainty over long time frames, and the diversity of factors influencing and constraining choice.  Latent semantic analysis is used to identify linguistically revealed preferences from the way parents describe their decision processes in the interviews.  Specific economic behaviour observed in the field will be discussed focusing on inter-generational discounting, decision heuristics, joint decision making, signalling and responses to ambiguity risk. The implications of behavioural decision rules and heterogeneous types of economic decision strategies on education policy will be discussed.

Using linguistic analysis to understand how parents choose schools for their children

In economics, there is limited use of linguistic analysis to understand decision making processes and the contextual relationship between preferences.  Over the last 6 months I have undertaken field research to understand how parents choose a school for their children and the decision architecture associated with this choice.  The objective was not simply to collect information about stated preferences per se, but to understand the complexity of the decision process.   I collected 22 exploratory interviews from Melbourne and regional Victorian parents – with a reasonable level of diversity in family demographics – looking at how they approach the problem of choosing a school for their children.

The purpose of these interviews was to principally explore for interesting economic ideas and questions arising from field observations.  The intent was not to achieve a statistically robust collection of interviews of limited scope but instead to explore for opportunities that would warrant targeted econometric, experimental or theoretical research in the later part of my PhD.   The presentation I gave at the 2014 ‘Cooperation and conflict in the family’ conference on an intergenerational discount heuristic is one of the ideas that arose from these field observations/interviews.

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Word cloud of school choice interviews of regionally (non-metro) based parents

Out of curiosity, below is a word cloud of the 4 school choice interviews of parents from regional Victoria, Australia.


It will be interesting to see how word cloud visualizations compare to more sophisticated linguistic analysis techniques.

Latent Semantic Analysis

An everyday application of Latent Semantic Analysis (LSA) is the Google search engine where words that are semantically/contextually similar are also returned in the search query.  Type in “run” and the search will also pick up “ran”, “runs” and “running”. LSA allows natural language processing of vast collections of data, such as web pages, to provide information about how similar words are related to each other in (semantic) context by converting words into vectors (vectorial semantics) and applying singular value decomposition to the matrix.  In this way, the data itself is used to create a ‘latent semantic dictionary/thesaurus’ which reflects the context of the documents being analysed.

LSA captures the contextual relationships between text documents and word meanings.  Taking into account the context in which words are used is important for linguistic analysis.  The contextual meaning of words change over time and across social groups.  An example of the importance of context is how the meaning of ‘terrific’ changes over time.  Latent semantic analysis of documents from the second half of the 19th century would show ‘terrific’ as similar to ‘horror’. While documents from the second half of the 20th century would show ‘horror’ as now being the opposite of ‘terrific’.

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Factors influencing academic outcomes

Recently Gary Becker in the Becker-Posner blog opined that “I believe much of the blame rests with the fact that many children from minority families are raised with a single and not very educated parent, and that the quality of the schools attended by minority children is deficient.”  This is quite a pessimistic statement considering it has been 50 years since the publishing of Becker’s seminal work on the economics of human capital ‘Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education’ (1964).

Below is a high level summary of the factors effecting academic outcomes associated with school choice.

Factors influencing academic outcomes

Factors affecting academic outcomes and generational mobility are complex and highly endogenous. I will add a number of posts on this specific topic over time as I try to tease out all the factors and try to draw logical and consistent connections between these factors.


Becker, G. S. (1964). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education.

School choice and Equity: OECD Literature Review

Pauline Musset’s OECD Education Working Paper ‘School choice and equity, current policies in OECD countries and literature review’ is a great review of research exploring motivations and educational outcomes of school choice policies, with a particular focus on evidence based research.  This working paper is one of the most lucid and succinct reviews of the very contentious area of education policy and its ability to effect educational outcomes.

Some of the topics covered are:

  • self-segregation based on ability, ethnicity or socioeconomic background
  • diversity of schooling
  • performance differences across school types and countries
  • the use of vouchers and the effectiveness of different types of voucher systems
  • how school choice can exacerbate social inequity

I found Pauline Musset’s classifications of the ideological motivations for increasing school choice opportunities for parents particularly useful.  She classifies these motivations into 3 groups:

  • introduction of market mechanisms in education to remedy inefficiencies;
  • individualist-libertarian claims of a parental right for choice in education;
  • school choice as a way of making education systems more equitable.


Musset, P. (2012), “School Choice and Equity: Current Policies in OECD Countries and a Literature Review”, OECD Education Working Papers, No. 66, OECD Publishing.

A discrete choice experiment : school choice

As part of my PhD research project “Modeling the hardest decision parents will make: School Choice” I will conducting a Discrete Choice Experiment (DCE) to understand how Australian parents apply behavioural decision rules in choosing schools for their children, and how choice sets are evaluated to find the ‘best choice’.

This research will help understand why Australian parents are spending an extra $5.4billion more per year in private school fees when socio-economic sorting across public schools would lead to the same academic outcomes.

We also hope to gain insight in to why some recently opened private schools have failed, leading to large losses, despite the strong willingness of parents’ to pay for private schooling.

This project will also look at the influence of a parent’s socio-economic background on the type and strength of preferences. Our results will have important social equity implications for understanding how wealth, occupation and prior education affect a parent’s choice of school. This will be the 1st time a discrete choice experiment has been applied to school choice even though it is an experimental approach applied extensively in other quasi-market public good areas of health, the environment & transport infrastructure. Previously DCE hasn’t been applied to education due to the inherently endogenous behaviour of educational choice attributes, which this project resolves.

If parents are not making classical rational choice decisions, this research will have important implications for economics & education policy that have not previously been identified.

Why do Australian parents pay $5.4billion more for education than they need to?

Why are Australian parents spending an extra $5.4billion per year in school fees when socio-economic sorting across public schools would lead to the same academic outcomes?

In Australia nearly a 1/3 of children attend non-government schools, however, analysis by the Australian Council for Educational Research shows that the type of school a child attends has little impact on academic outcomes.  School academic outcomes are primarily driven by the socio-economic factors of the parents and the student peer group of the school.  ACER’s analysis of the 2009 PISA results (Thomson et al. 2010) shows that the majority, greater than 90%, of a student’s academic results are the result of either their family background or student peer effects at a particular school. These results are consistent with the recent Grattan report ‘The myth of markets in school education’ that the choice of school type had little to no influence on academic outcomes, other than the student peer effects associated with the socio-economic composition of the school student body.

If we apply the classic community optimization problem  (Tiebout 1956), in a solely public school system, families in their attempt to optimize both wealth and academic outcomes will sort themselves spatially & demographically in a way that leads to optimal choice outcomes.  In this way the benefits of a child’s socio-economic background will be matched with a student peer group of a similar socio-economic background in order achieve optimal academic outcomes for families.  Below is a conceptual diagram of the sorting.

Tiebout like sorting

While the educational outcome maybe optimal sorting, there is no net gain for the economy as what is gained at the top is given back at the bottom.  This is consistent with econometric studies in the USA (Ladd 2002). What is optimised is the wealth vs. education trade-offs for individual families.

We know that this type of Tiebout-like sorting occurs naturally within an economy from econometric studies showing a correlation between residential house prices and school quality (Black 1999).  In Canberra, Australia, a study done by Davidoff & Leigh (2008) indicated that for every 5% increase in school average academic achievement prices of houses nearby increased by 3.5%.

Tiebout like sorting - private schools

Approximately 20% of school students attend Catholic schools in Australia and another 14% attend Independent schools.  If academic outcomes are principally a function of socio-economic factors and not school type, why are Australian parents paying an extra $5.4billion per year (2009 figures) to choose a non-government school?

Is this because school choice is driven primarily by signalling of student peer group socio-economic ‘quality’ and private schools provide better signalling of this ‘quality’?  Or is school choice is driven primarily by ‘consumption’ of non-academic preferences such as teacher leadership, culture, & personal development?

I hope to answer these questions by conducting an online discrete choice experiment into school choice as part of my PhD research.

The basis for my $5.4billion calculation is:

From waterfall Graph 5 of the Gonski report, in 2009 student school attendance by type for Australia was: Gov’t 2.3million, Catholic 0.7million, Independent 0.5million. Private/parental costs per student per type are: Gov’t $0.4k, Catholic $2.6k, Independent $8.2k Deducting the Gov’t baseline parent cost of $0.4k, $5.4billion = (700k catholic students x $2.2k) + (500k Independent students x $7.8k). Note also that these school cost figures are recurrent costs/income and for both primary & secondary schools. Capital grants are excluded, mainly because capital costs have a number of sources other than parents.

It is interesting to note that the total recurrent cost of teaching a gov’t school student is $11.1k per year (2009) and that Catholic schools have a lower cost of delivery at $10k per student for what you could say is a better quality outcome.


Black, S 1999 ‘Do better schools matter? Parental valuation of elementary education’, Quarterly Journal of Economics 114 (2), 577–599.

Davidoff, IAN & Leigh, A 2008, ‘How Much do Public Schools Really Cost? Estimating the Relationship between House Prices and School Quality’, Economic Record 84(265): 193-206.

Ladd, HF 2002, ‘School Vouchers: A Critical View’, Journal of Economic Perspectives 16(4): 3-24.

Thomson, S, De Bortoli, L, Nicholas, M, Hillman, K & Buckley, S 2010 ‘Highlights from the full Australian Report: challenges for Australian education: results from PISA 2009’, Australian Council for Educational Research.

Tiebout, CM 1956, ‘A pure theory of local expenditures’, The journal of political economy, 64(5), 416-424.

Determinants of parental school choice: A Qualitative Study

I’m currently undertaking a qualitative study into the determinants of parental school choice.  The study comprises 22 semi-structured exploratory interviews of Australian parents,  principally from Melbourne with some from regional Victoria.  Parents come from diverse backgrounds of educational history, educational choice of school type, and cultural.

Following from George Shackle that for choice there need to be alternatives, the socio-economic backgrounds of the parents interviewed are broadly middle socio-economic, from low to high middle class.  For the very wealthy there is no alternative to the ‘best’ and for the low socio-economic parents income & behavioural constraints mean that there are no alternatives to their default choice.

Australia is a particularly interesting country to investigate the decision architecture of how parents choose a school for their children due to the absence of strong racial (USA) or social-class preferences (UK).  Race and social-class preferences are present in Australia but are not strong enough to completely outweigh other preferences that it is difficult to differentiate preferences associate with teacher quality, student personal development, discipline and community.  Race in the USA and social-class in the UK have become dominant proxies for these more differentiated preferences leading to simple binary choice decision making.

Having a range of differentiated preference attributes allow a deeper investigation into how social & family human capital investment preferences are traded-off between each other and the decision strategies that are being used.  When there a number of competing preferences which are quite varied, it can be very interesting to find some behaviours that should be present but is consistently missing from the interviews.  When choices are binary by proxy it is difficult to find decision structure and gaps.

Parental choice is extraordinarily complex being both inter-generational and inter-temporal in nature. It is subject to parental income, time and regulatory constraints. Choice is subject to high levels of uncertainty over very long time frames. Choices are path dependent, in most case irreversible and subject to imperfect information. Individual choice is also very context dependent, subject to the experiences of parents, their expectations of the future, a duty to their children and emotional attachment.

Where there is a common curriculum, choice is not about the quality of ‘education as knowledge’ per se. At a very high level, education choice is about quality of instruction, teacher quality or program choice, or the quality of the learning environment effected by student peers and culture. Individual preferences of parents are reflected in the type of school they choose for their child to attend. Choice may be a default choice based on constraints, or a choice exercise within a type of schools such as different public schools, or across school types.

The main education choice that this study focuses on is choice of secondary school by parents for their children.  Choices in Australia are: independent schools (generally Protestant religion aligned), Catholic schools, government public schools (entry determined by residential boundary), and government selective public schools (academic, music, sport etc.).  The state of Victoria also has an accelerated learning program in some publics schools which are not constrained by location of residence by require passing an entrance exam.

A comprehensive review of the Australian school sector can be found in the Gonski Review.

It is important to note that unlike the USA, funding of schools in Australia is from broad based taxes (universal vouchers approach) and not aligned with local property taxes.

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