Choosing the Future: Economic Preferences for Higher Education Using Discrete Choice Experiment Method

This study illustrates how respondents’ stated choices (the discrete choice experiment method) combined with the random utility framework can be used to model preferences for higher education. The flexibility offered by stated preference data circumvents limitations of other approaches, and allows quantifying young people’ preferences for selected attributes of higher education programs that are typically highly correlated in revealed preference data. The empirical study presented here is based on a survey of 20,000 Polish respondents aged 18–30, who stated their preferences for higher education programs in carefully prepared hypothetical choice situations. The attributes considered include tuition fee, expected salary after graduation, quality of institution, interest in the field of study, distance from home, and mode of study. Using random parameters and latent class mixed multinomial logit models, young peoples’ preferences are formally described, and the financial trade-offs they are willing to make are identified (willingness to pay for specific attribute levels in terms of increased tuition fees or expected salary after graduation). Accounting for respondents’ observed and unobserved preference heterogeneity addresses a few research questions related to, for example, distinct preferences of students with parents who never attained tertiary education, students from lower socio-economic groups, or students of a particular gender. Overall, the usefulness of stated preference methods as a tool for exploring economic preferences is demonstrated, allowing for better understanding the determinants of choices, forecasting, and designing the services offered by higher education institutions in an optimal way.