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Higher education funding: The value of information

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  • Hatsor, Limor

Abstract

I study the key role of information in private higher-education funding. Students receive a signal about their individual skills, and then choose a portfolio of loans. I find that information is harmful, whereas noisier (less informative) signals improve the social welfare.

Suggested Citation

  • Hatsor, Limor, 2021. "Higher education funding: The value of information," MPRA Paper 122617, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:122617
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    References listed on IDEAS

    as
    1. Hirshleifer, Jack, 1971. "The Private and Social Value of Information and the Reward to Inventive Activity," American Economic Review, American Economic Association, vol. 61(4), pages 561-574, September.
    2. Chapman, Bruce, 2006. "Income Contingent Loans for Higher Education: International Reforms," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 2, chapter 25, pages 1435-1503, Elsevier.
    3. Bernhard Eckwert & Itzhak Zilcha, 2012. "Private Investment in Higher Education: Comparing Alternative Funding Schemes," Economica, London School of Economics and Political Science, vol. 79(313), pages 76-96, January.
    4. Edward E. Schlee, 2001. "The Value of Information in Efficient Risk-Sharing Arrangements," American Economic Review, American Economic Association, vol. 91(3), pages 509-524, June.
    5. Hatsor, Limor, 2014. "Efficient Funding of Higher Education," Foerder Institute for Economic Research Working Papers 275827, Tel-Aviv University > Foerder Institute for Economic Research.
    6. Eckwert, Bernhard & Zilcha, Itzhak, 2010. "Improvement in information and private investment in education," Journal of Economic Dynamics and Control, Elsevier, vol. 34(4), pages 585-597, April.
    7. Bernhard Eckwert & Itzhak Zilcha, 2004. "Economic implications of better information in a dynamic framework," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(3), pages 561-581, October.
    8. Green, Jerry R, 1981. "Value of Information with Sequential Futures Markets," Econometrica, Econometric Society, vol. 49(2), pages 335-358, March.
    9. Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
    10. Talia Bar & Vrinda Kadiyali & Asaf Zussman, 2009. "Grade Information and Grade Inflation: The Cornell Experiment," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 93-108, Summer.
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    Cited by:

    1. Limor Hatsor & Ronen Bar-El, 2024. "Higher education funding: The value of choice," Papers 2411.05506, arXiv.org.
    2. Limor Hatsor & Itzhak Zilcha, 2021. "Subsidizing heterogeneous higher education systems," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(2), pages 318-344, April.

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    More about this item

    Keywords

    Education finance; Higher education; Human capital; Information; Welfare;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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