A06
Educational Choices, Market Design, and Student Outcomes
Discussion Papers

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Discussion Paper No. 311
January 18, 2022

Income Contingency and the Electorate’s Support for Tuition

Authors:
Lergetporer, Philipp (TU Munich and ifo Institute)
Woessmann, Ludger (ifo Institute and LMU Munich)
Abstract:
We show that the electorate’s preferences for using tuition to finance higher education strongly depend on the design of the payment scheme. In representative surveys of the German electorate (N>18,000), experimentally replacing regular upfront by deferred income-contingent payments increases public support for tuition by 18 percentage points. The treatment turns a plurality opposed to tuition into a strong majority of 62 percent in favor. Additional experiments reveal that the treatment effect similarly shows when framed as loan repayments, when answers carry political consequences, and in a survey of adolescents. Reduced fairness concerns and improved student situations act as strong mediators.
Keywords:
tuition; higher education finance; income-contingent loans; voting
JEL-Classification:
H52; I22; D72
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Discussion Paper No. 309
January 3, 2022

Can Schools Change Religious Attitudes? Evidence from German State Reforms of Compulsory Religious Education

Authors:
Arold, Benjamin W. (ifo Institute and LMU Munich)
Woessmann, Ludger (ifo Institute and LMU Munich)
Zierow, Larissa (ifo Institute and LMU Munich)
Abstract:
We study whether compulsory religious education in schools affects students’ religiosity as adults. We exploit the staggered termination of compulsory religious education across German states in models with state and cohort fixed effects. Using three different datasets, we find that abolishing compulsory religious education significantly reduced religiosity of affected students in adulthood. It also reduced the religious actions of personal prayer, church-going, and church membership. Beyond religious attitudes, the reform led to more equalized gender roles, fewer marriages and children, and higher labor-market participation and earnings. The reform did not affect ethical and political values or non-religious school outcomes.
Keywords:
religious education; religiosity; school reforms
JEL-Classification:
Z12; I28; H75
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Discussion Paper No. 308
December 27, 2021

The Bargaining Trap

Authors:
Schweighofer-Kodritsch, Sebastian (HU Berlin)
Abstract:
I revisit the Rubinstein (1982) model for the classic problem of price hag- gling and show that bargaining can become a “trap,” where equilibrium leaves one party strictly worse off than if no transaction took place (e.g., the equilibrium price exceeds a buyer’s valuation). This arises when one party is impatient about capturing zero surplus (e.g., Rubinstein’s example of fixed bargaining costs). Augmenting the protocol with unilateral exit options for responding bargainers generally removes the trap.
Keywords:
alternating offers; bargaining; time preferences; haggling costs; outside options
JEL-Classification:
C78; D03; D74
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Discussion Paper No. 307
December 22, 2021

Strategy-Proof and Envy-Free Random Assignment

Authors:
Basteck, Christian (WZB Berlin)
Ehlers, Lars (Université de Montréal)
Abstract:
We study the random assignment of indivisible objects among a set of agents with strict preferences. We show that there exists no mechanism which is unanimous, strategy-proof and envy-free. Weakening the first requirement to q-unanimity – i.e., when every agent ranks a different object at the top, then each agent shall receive his most-preferred object with probability of at least q – we show that a mechanism satisfying strategy-proofness, envy-freeness and ex-post weak non-wastefulness can be q-unanimous only for q ≤ n2 (where n is the number of agents). To demonstrate that this bound is tight, we introduce a new mechanism, Random-Dictatorship-cum-Equal-Division (RDcED), and show that it achieves this maximal bound when all objects are acceptable. In addition, for three agents, RDcED is characterized by the first three properties and ex-post weak efficiency. If objects may be unacceptable, strategy-proofness and envy-freeness are jointly incompatible even with ex-post weak non-wastefulness.
Keywords:
random assignment; strategy-proofness; envy-freeness; q-unanimity
JEL-Classification:
D63; D70
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Discussion Paper No. 303
November 29, 2021

Aiding Applicants: Leveling the Playing Field within the Immediate Acceptance Mechanism

Authors:
Basteck, Christian (WZB Berlin)
Mantovani, Marco (University of Milan-Bicocca)
Abstract:
In school choice problems, the widely used manipulable Immediate Acceptance mechanism (IA) disadvantages unsophisticated applicants, but may ex-ante Pareto dominate any strategy-proof alternative. In these cases, it may be preferable to aid applicants within IA, rather than to abandon it. In a laboratory experiment, we first document a substantial gap in strategy choices and outcomes between subjects of higher and lower cognitive ability under IA. We then test whether disclosing information on past applications levels the playing field. The treatment is effective in partially reducing the gap between applicants of above- and below-median cognitive ability and in curbing ability segregation across schools, but may leave the least able applicants further behind.
Keywords:
laboratory experiment; school choice; immediate acceptance; strategy-proofness; cognitive ability; mechanism design
JEL-Classification:
C78; C91; D82; I24
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Discussion Paper No. 294
November 15, 2021

Earnings Information and Public Preferences for University Tuition: Evidence from Representative Experiments

Authors:
Lergetporer, Philipp (TU Munich, ifo Institute and CESifo)
Woessmann, Ludger (LMU Munich, ifo Institute and CESifo)
Abstract:
Higher education finance depends on the public’s preferences for charging tuition, which may be partly based on beliefs about the university earnings premium. To test whether public support for tuition depends on earnings information, we devise survey experiments in representative samples of the German electorate (N>15,000). The electorate is divided, with a plurality opposing tuition. Providing information on the university earnings premium raises support for tuition by 7 percentage points, turning the plurality in favor. The opposition-reducing effect persists two weeks after treatment. Information on fiscal costs and unequal access does not affect public preferences. We subject the baseline result to various experimental tests of replicability, robustness, heterogeneity, and consequentiality.
Keywords:
tuition; higher education; information; earnings premium; public opinion; voting
JEL-Classification:
H52; I22; D72; D83
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Discussion Paper No. 291
November 1, 2021

The Legacy of Covid-19 in Education

Authors:
Werner, Katharina (LMU Munich and CESifo)
Woessmann, Ludger (LMU Munich and CESifo)
Abstract:
If school closures and social-distancing experiences during the Covid-19 pandemic impeded children’s skill development, they may leave a lasting legacy in human capital. To understand the pandemic’s effects on school children, this paper combines a review of the emerging international literature with new evidence from German longitudinal time-use surveys. Based on the conceptual framework of an education production function, we cover evidence on child, parent, and school inputs and students’ cognitive and socio-emotional development. The German panel evidence shows that children’s learning time decreased severely during the first school closures, particularly for low-achieving students, and increased only slightly one year later. In a value-added model, learning time increases with daily online class instruction, but not with other school activities. The review shows substantial losses in cognitive skills on achievement tests, particularly for students from disadvantaged backgrounds. Socio-emotional wellbeing also declined in the short run. Structural models and reduced-form projections suggest that unless remediated, the school closures will persistently reduce skill development, lifetime income, and economic growth and increase inequality.
Keywords:
Covid-19; school closures, education, schools, students, educational inequality
JEL-Classification:
I20; H52; J24
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Discussion Paper No. 280
February 26, 2021

Costly Information Acquisition in Centralized Matching Markets

Authors:

Hakimov, Rustamdjan (University of Lausanne and WZB Berlin)
Kübler, Dorothea (WZB Berlin and TU Berlin)
Pan, Siqi (University of Melbourne)

Abstract:

Every year during school and college admissions, students and their parents devote considerable time and effort to acquiring costly information about their own preferences. In a market where students are ranked by universities based on exam scores, we explore ways to reduce wasteful information acquisition - that is, to help students avoid acquiring information about their out-of-reach schools or universities - using a market design approach. We find that, both theoretically and experimentally, a sequential serial dictatorship mechanism leads to less wasteful information acquisition and higher student welfare than a direct serial dictatorship mechanism. This is because the sequential mechanism informs students about which universities are willing to admit them, thereby directing their search. Additionally, our experiments show that the sequential mechanism has behavioral advantages because subjects deviate from the optimal search strategy less frequently under the sequential than under the direct mechanism. We also investigate the effects of providing historical cutoff scores under the direct mechanism. We find that the cutoff provision can increase student welfare, especially when the information costs are high, although the effect is weaker than that of a sequential mechanism.

Keywords:

matching market; deferred acceptance; information acquisition; game theory; lab experiment

JEL-Classification:

C92; D47

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Discussion Paper No. 277
February 26, 2021

Can Mentoring Alleviate Family Disadvantage in Adolescence? A Field Experiment to Improve Labor-Market Prospects

Authors:
Resnjanskij, Sven (ifo Institute)
Ruhose, Jens (Kiel University)
Wiederhold, Simon (Catholic University Eichstaett-Ingolstadt)
Woessmann, Ludger (ifo Institute and LMU Munich)
Abstract:

We study a mentoring program that aims to improve the labor-market prospects of school-attending adolescents from disadvantaged families by offering them a university-student mentor. Our RCT investigates program effectiveness on three outcome dimensions that are highly predictive of adolescents´ later labor-market success: math grades, patience/social skills, and labor-market orientation. For low-SES adolescents, the one-to-one mentoring increases a combined index of the outcomes by half a standard deviation after one year, with significant increases in each dimension. Part of the treatment effect is mediated by establishing mentors as attachment figures who provide guidance for the future. The mentoring is not effective for higher-SES adolescents. The results show that substituting lacking family support by other adults can help disadvantaged children at adolescent age.

Keywords:
mentoring; disadvantaged youths; adolescence; school performance; patience; social skills; labor-market orientation; field experiment
JEL-Classification:
I24; J24; H52
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Discussion Paper No. 273
January 21, 2021

Alcohol and Short-Run Mortality: Evidence from a Modern-Day Prohibition

Author:

Barron, Kai (WZB Berlin)
Bradshaw, Debbie (SAMRC & University of Cape Town)
Parry, Charles D. H. (SAMRC & Stellenbosch University)
Dorrington, Rob (University of Cape Town)
Groenewald, Pam (SAMRC)
Laubscher, Ria (SAMRC)
Matzopoulos, Richard (SAMRC & University of Cape Town)

Abstract:

On July 13, 2020 a complete nation-wide ban was placed on the sale and transport of alcohol in South Africa. This paper evaluates the impact of this sudden and unexpected five-week alcohol prohibition on mortality due to unnatural causes. We find that the policy reduced the number of unnatural deaths by 21 per day, or approximately 740 over the five-week period. This constitutes a 14% decrease in the total number of deaths due to unnatural causes. We argue that this represents a lower bound on the impact of alcohol on short-run mortality, and underscores the severe influence that alcohol has on society—even in the short-run.

Keywords:

alcohol; mortality; economics; health; South Africa; COVID-19; violence

JEL-Classification:

I18; I12; K42

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