Student responses to financial incentives

In this PhD project an alternative theoretical framework to explain student responses to financial incentives is tested. As such, we use the “theory of economic behavior” (see e.g. Kahneman and Tversky, 2000; Thaler, 1991). This relatively new theory lies on the intersection between economics and psychology. It explains systematic deviations from rational economic choice through using a number of psychological concepts, such as loss aversion, mental accounting, status quo bias, intertemporal choice, reference levels, and rules of thumb. The theory has yet been applied to financial markets and peoples spending and saving behavior. But is it looks very promising to extend this quasi-rational model to the field of student finance. Particularly taking an international comparative perspective can be useful in testing its relevance for educational investment. Why are some students deterred by tuition fees while compensated by grants? Why are some groups willing to take up student loans while others do not?

Researcher involved: Hans Vossensteyn