TY - JOUR
T1 - Closing the gap
T2 - The effect of reducing complexity and uncertainty in college pricing on the choices of low-income students
AU - Dynarski, Susan
AU - Libassi, C. J.
AU - Michelmore, Katherine
AU - Owen, Stephanie
N1 - Funding Information:
* Dynarski: University of Michigan and NBER (email: dynarski@umich.edu); Libassi: Teachers College, Columbia University (email: cjl2232@tc.columbia.edu); Michelmore: Syracuse University (email: kmmichel@ maxwell.syr.edu); Owen: University of Michigan and Colby College (email: srowen@umich.edu). Stefano DellaVigna was the coeditor for this article. This project would not have been possible without our collaborators at the University of Michigan, particularly Kedra Ishop, Steve Lonn, and Betsy Brown. We are grateful to the Michigan Department of Education (MDE) and Michigan’s Center for Educational Performance and Information (CEPI) for providing data. Seminar participants at Boston University, Clemson, Cornell, Harvard, Northwestern, University of Illinois, University of Virginia, Princeton, Chicago, Stanford, the National Bureau for Economic Research, and Syracuse provided helpful comments, while Sarah Cohodes, Michael Lovenheim, and Sarah Turner generously read initial drafts. The Institute of Education Sciences of the US Department of Education (through grants R305E100008 and R305B110001), Arnold Ventures, the Smith Richardson Foundation, and the University of Michigan Provost’s Office funded this research. This study is registered at the randomized trial registry of the American Economic Association under RCT ID AEARCTR-0001831, with DOI 10.1257/rct.1831. A pre-analysis plan was filed in April 2017 (Dynarski et al. 2017). The code for replicability purposes has been deposited in the AEA Data and Code Repository, openicpsr-130286. This research was approved by the Institutional Review Board at the University of Michigan (ID: HUM00096289) and Syracuse University (ID: 16-264). Elizabeth Burland, Meghan Oster, and Shwetha Raghuraman provided outstanding research assistance. This research uses data structured and maintained by the Michigan Education Data Center (MEDC) (Michigan Department of Education 2020a, b). MEDC data are modified for analysis purposes using rules governed by MEDC and are not identical to those data collected and maintained by MDE and/or CEPI. Results, information and opinions solely represent the analysis, information and opinions of the author(s) and are not endorsed by, or reflect the views or positions of, grantors, MDE and CEPI or any employee thereof.
Publisher Copyright:
© 2021 American Economic Association. All rights reserved.
PY - 2021/6
Y1 - 2021/6
N2 - High-achieving, low-income students attend selective colleges at far lower rates than upper-income students with similar achievement. Behavioral biases, intensified by complexity and uncertainty in the admissions and aid process, may explain this gap. In a large-scale experiment we test an early commitment of free tuition at a flagship university. The intervention did not increase aid: rather, students were guaranteed before application the same grant aid that they would qualify for in expectation if admitted. The offer substantially increased application (68 percent versus 26 percent) and enrollment rates (27 percent versus 12 percent). The results suggest that uncertainty, present bias, and loss aversion loom large in students'college decisions.
AB - High-achieving, low-income students attend selective colleges at far lower rates than upper-income students with similar achievement. Behavioral biases, intensified by complexity and uncertainty in the admissions and aid process, may explain this gap. In a large-scale experiment we test an early commitment of free tuition at a flagship university. The intervention did not increase aid: rather, students were guaranteed before application the same grant aid that they would qualify for in expectation if admitted. The offer substantially increased application (68 percent versus 26 percent) and enrollment rates (27 percent versus 12 percent). The results suggest that uncertainty, present bias, and loss aversion loom large in students'college decisions.
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U2 - 10.1257/AER.20200451
DO - 10.1257/AER.20200451
M3 - Article
AN - SCOPUS:85103580899
SN - 0002-8282
VL - 111
SP - 1721
EP - 1756
JO - American Economic Review
JF - American Economic Review
IS - 6
ER -