RELEVANCE OF UTILITY MAXIMIZATION IN STUDENT UNIVERSITY CHOICE – A CONSUMPTION-BASED MODEL FOR HIGHER EDUCATION

Eric S. Schwartz ()
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Eric S. Schwartz: Virginia Tech, Department of Educational Leadership and Policy Studies, Blacksburg, Virginia, USA

Review of Economic and Business Studies, 2011, issue 7, 157-177

Abstract: This paper applies a model of utility-maximization to better understand the university choice process. Student decision-making for university choice is conceptualized as a purchase decision process through which students weigh the costs of colleges or universities they choose against their perceived benefits of attending these institutions. The key issues are the impact of consumer’s preferences, income, tuition, and costs in college decision-making. From this perspective, the paper describes the relationship between utility maximization and educational demand, effects of tuition increases, tuition discounting, and financial aid subsidies on university choice. A decision-making scheme for educational consumption is used in order to identify the stages of the university choice process and to predict the behavior of consumers in the higher education marketplace. The analysis points to the need to better inform students about the cost of postsecondary education which is a highly relevant aspect in the university choice process.

Keywords: College choice; consumer behavior; higher education; human capital; student-choice model (search for similar items in EconPapers)
JEL-codes: A12 D01 D11 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:aic:revebs:y:2011:i:7:schwartze

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