Behavioural Approaches to Understanding Student Choice
“it’s the biggest financial decision that anyone will ever make, apart from a house” (head of marketing, Russell Group university)
Although young people’s decisions about what and where to study increasingly require calculations of the costs and returns on doing a degree, evidence from behavioural psychology reveals that decision-making is a complex process that is equally influenced by non-rational judgments. In CFE’s research on higher education, we find that behavioural economics offers a way to better understand this decision-making process.
Much of the early research into student choice is informed by the dominant economic theory of today, which is neoclassical economics. This theory assumes that an individual rationally weighs up the potential costs and benefits of alternative decisions and chooses the option that will maximise their own long-term ‘utility’ – which we can understand as our overall wellbeing. It also assumes the information is available, and that we have unlimited capacity for information-processing. The problem is that there’s so many options and so much information that we cannot possibly perform all the necessary calculations. Adding to the problem is the fact that it is impossible to know beforehand what job we will end up in and how much we will earn. So if we can’t determine the returns, this makes it harder to work out whether it will be worth the cost.
Behavioural economics tells us that when we are faced with a bewildering array of choices and lots of information, we tend to rely on heuristics. These are ‘rules of thumb’ that offer an alternative to rational calculation. They are quicker, but they are also less reliable. Behavioural studies show that – in contradiction to neoclassical theory – these non-rational judgements are unreliable in predictable ways. These are called ‘cognitive biases’. For example, the order in which information is presented influences judgements. In a simple study, two groups of people were asked to estimate the answer to the same multiplication problem presented in one of two ways: ‘1×2×3×4×5×6×7×8 = ?’ or ‘8×7×6×5×4×3×2×1 = ?’ The group that were given numbers in ascending order tended to give lower estimates than those who were given the numbers in descending order. This is the ‘anchoring effect’, in which earlier pieces of information have a stronger influence on judgements than later ones. A similar effect is the ‘availability bias’, in which information that is readily recalled in memory has a greater influence.
This kind of behavioural approach is increasingly used not only to inform research on how people make important decisions, but also for informing policy development. For example, the government’s Behavioural Insights Team is using these findings to help consumers make better choices, to get more people involved in volunteering and physical activity, and to make recruitment processes fairer.
Through speaking to students and graduates, and to their tutors and parents, we learned that what makes a university the ’right’ choice for an individual is about much more than economic decisions. Places and people – embodied in the ‘character’ and ethos of an institution – have at least as much significance for what makes an enjoyable and rewarding experience in higher education. Family and friends have greater influence than formal advice, and this influence begins much earlier than the point at which the decision is finalised. This is important especially as a degree is increasingly used not just as a financial investment (in neoclassical economics, a ‘consumption good’) but also as a ‘positional good’ that enables graduates to negotiate their place in the labour market and to make a useful contribution to the economy through meaningful employment. We will explore what makes work ‘meaningful’ in another blog post [read now].
For more on our research on behavioural approaches and higher education, see:
Article in The Guardian – ‘Student choice: what informs it most?’: https://www.theguardian.com/higher-education-network/blog/2012/dec/11/student-choice-higher-education
CFE’s report for HEA & NUS – ‘Behavioural Approaches to Understanding Student Choice’: https://www.heacademy.ac.uk/sites/default/files/resources/student_choice.pdf