EconPapers    
Economics at your fingertips  
 

The role of time preferences in educational decision making

Daniel Kemptner () and Songuel Tolan

Economics of Education Review, 2018, vol. 67, issue C, 25-39

Abstract: We analyze the implication of time-inconsistent preferences in educational decision making and corresponding policies using a structural dynamic choice model. We make two important research contributions. First, we estimate our model using data from the German Socioeconomic Panel (soep) and provide quantitative evidence for time-inconsistent behavior in educational decision making. Second, we evaluate the relevance of time-inconsistent behavior for the effectiveness of education policies. For this purpose, we simulate policies where time preferences may play an important role: (1) an increase in the state grant for students as a way to affect short-term costs while at school and (2) an increase in the state grant as a loan that must be paid back after education is completed. We find substantial differences in the educational outcomes when comparing them to the outcomes based on a model specification with exponential discounting. Hence, the common assumption of exponential discounting in educational decisions may be too restrictive.

Keywords: Time preferences; Hyperbolic discounting; Structural estimation; Dynamic discrete choice; Education (search for similar items in EconPapers)
JEL-codes: C61 D91 I21 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0272775717304314
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Role of Time Preferences in Educational Decision Making (2016) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecoedu:v:67:y:2018:i:c:p:25-39

DOI: 10.1016/j.econedurev.2018.09.006

Access Statistics for this article

Economics of Education Review is currently edited by E. Cohn

More articles in Economics of Education Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:ecoedu:v:67:y:2018:i:c:p:25-39