Estimating the Value of Higher Education Financial Aid: Evidence from a Field Experiment
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2016-06-01
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Abstract
Using data from a Canadian field experiment designed to elicit risk and time preferences and quantify financial barriers to higher education, we estimate the distribution of the value of financial aid for prospective students, and relate it to parental socio-economic background, individual skills, risk and time preferences. Our results point to credit constraints affecting a sizable share of prospective students. We find that most of the individuals are willing to pay a sizable interest premium above the prevailing market rate for the option to take-up a loan, with a median interest rate wedge equal to 6.6 percentage points for a $1,000 loan. The willingness-to-pay for financial aid is also highly heterogeneous across students, with preferences, in particular discount factors, playing a key role in accounting for this variation.
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Scholars@Duke
Arnaud Maurel
Professor Maurel’s research focuses on labor economics/education and microeconometrics. Most of his non-methodological work lies at the intersection between the economics of education and labor economics, with a focus on post-secondary education demand and occupational choices. On the methodological side, his research is concerned with the identification and estimation of selection and treatment effect models, as well as models of occupational choice and job search, and on data combination issues applied in particular to subjective expectations data. His most recent work has been published in such journals as the Journal of Political Economy, Journal of Labor Economics, Quantitative Economics, Journal of Econometrics and the Review of Economics and Statistics. He has received several research awards, notably the 2015 Dennis J. Aigner Award for the most significant contribution in empirical econometrics published by the Journal of Econometrics in 2013-2014. He is also a Research Associate at the NBER (Labor Studies) and IZA, a Co-Editor of Annals of Economics and Statistics, and Associate Editor at Quantitative Economics and the Journal of Business and Economic Statistics.
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