Professor Basit Zafar, Esteban M. Aucejo, and Jacob F. French released NBER working paper, “Estimating Students' Valuation for College Experiences”.
The college experience involves much more than credit hours and degrees. Students likely derive utility from in-person instruction and on-campus social activities. Quantitative measures of the value of these individual components of the college experience have been hard to come by. Leveraging the COVID-19 shock, we elicit students’ intended likelihood of enrolling in higher education under different costs and possible states of the world. These states, which would have been unimaginable in the absence of the pandemic, vary in terms of class formats (i.e., in-person vs. remote instruction) and restrictions to campus social life. We show how such data can be used to recover student’s willingness-to-pay (WTP) for college-related activities in the absence of COVID-19, without parametric assumptions on the underlying heterogeneity in WTP. Our data come from a module that we fielded to approximately 1,500 undergraduate students at one of the largest public universities in the United States. We find that the WTP for in-person instruction (relative to a remote format) represents around 4.2% of the average annual net cost of attending university, while the WTP for on-campus social activities is 8.1% of the average annual net costs. We also find large heterogeneity in WTP, which varies systematically across socioeconomic groups. Our analysis shows that economically-disadvantaged students derive substantially lower value from university social life, but this is primarily due to time and resource constraints. We also validate our approach by showing that the heterogeneity in the estimated WTPs is systematically correlated with students’ actual enrollment decisions in the subsequent semester. Beyond providing an explanation for why college persistence rates may differ by socioeconomic background, our results have implications for how college costs should be structured.
Professor Zafar's working paper information can be found here.