Economics of Education
Friday, Jan. 5, 2018 2:30 PM - 4:30 PM
- Chair: Rajashri Chakrabarti, Federal Reserve Bank of New York
Student Loan Nudges: Experimental Evidence on Borrowing and Educational Attainment
AbstractWe estimate the impact of student loan “nudges” on community college students' borrowing and provide the first experimental evidence of the effect of student loans on educational attainment. Nonbinding loan offers listed in students' financial aid award letters, that do not alter students' choice sets, significantly affect borrowing. Students randomly assigned to receive a nonzero loan offer were 40 percent more likely to borrow than those who received a $0 loan offer. Nudge-induced borrowing increased both GPA and credits earned by roughly 30 percent un the year of the intervention, and in the following year, increased transfers to four-year colleges by 10 percentage points (nearly 200 percent). We predict that the average student would be better off receiving a nonzero loan offer for any discount rate below 12.4 percent. Students' borrowing responses to the nudge are most consistent with a model in which nonzero offers provide information about loan eligibility, suggesting that for most students, nonzero offers are welfare enhancing. Given that over 5 million U.S. college students receive $0 loan offers, our results indicate the potential to achieve large gains in educational attainment through changes to the choice architecture around borrowing.
Persistency in Teachers' Grading Biases and Effect on Longer Term Outcomes: University Admission Exams and Choice of Field of Study
AbstractRecent research focus on what shapes gender differences in academic achievements and in university field of study. In this paper we focus on how teachers’ gender role attitudes and stereotypes influence the gender gap by affecting the environment at school. We explore the extent to which teachers’ gender bias in high school influences students’ academic performance in high-stake exams that determine admission to universities and on students’ choice of university field of study. We use data from large number of high schools in Greece and measure teachers’ bias as the difference between a student’s school exam score in 11th and in 12th grade (scored ‘non-blindly’ by the students’ teachers) and her national exam score (taken at the end of 11th and 12th grade and scored blindly). We then define a teachers’ bias measure at the class level by the difference between boy’s and girl’s average gap between the school score and the national score. Positive values indicate that a teacher is biased in favor of boys in a particular subject. We link teachers over time and are therefore able to get a persistent teacher’s bias measure based on multiple classes, and the effect is estimated for later students’ performance. The panel data on teachers relieves concerns that our measure of gender bias may just pick up random (small sample) variation in the unobserved "quality" or "non-cognitive" skills of the boys vs. girls in a particular single class or any other class specific dynamics. Our results may be summarized with three broad conclusions. First, the same teachers who are biased for one class are biased in the same way for other classes in the same year and in classes in earlier or later academic years. The very high correlations of within teachers’ biases in different classes reveal high persistency in teachers’ stereotypical behavior. Second, teachers’ biases in core and elective subjects (classics, social science, science, exact science) have positive effect on boys’ and negative effects on girls’ performance on end of high school university admission exams. Female teachers are more pro-girls on average but the effect of female and male teachers’ biases on national exams are not statistically different. Third, teachers’ biases in specific courses lower the likelihood that students enroll in a related field of study at the university. This average effect masks large heterogeneity by gender, being larger and statistically significant for girls and not different from zero for boys. However, the effect on choice of STEM subjects are large and positive for boys and small and insignificant for girls.
Getting Ahead by Spending More? Local Community Response to State Merit Aid Programs
AbstractIn more than half of U.S. states over the last two decades, the implementation of merit aid programs has dramatically reduced tuition expenses for college-bound students who attend in-state colleges. In this paper, we analyze a hitherto-unexplored impact of these programs: whether merit aid programs led to changes in state support for higher education and K-12 education, and whether and how school districts responded to such changes. Exploiting the staggered adoption of state merit aid programs as a natural experiment, we employ two methodologies to study whether this has been the case: a difference-in-differences model and a synthetic control estimation strategy. We find robust evidence that implementation of merit aid programs led to an economically (and statistically) significant decline in state funding for K-12 education, underlining a potential trade-off between limited state resources and competing priorities. The decline in state aid was mostly offset through increases in local revenues by school districts, underscoring the importance of a compensatory relationship between these two forms of revenues. In states that implemented a `strong' merit aid program, these effects, particularly on state revenue, were of both an economically and statistically significant larger magnitude relative to states with weaker programs.
- I21 - Analysis of Education