Tuition Fees and Sunk‐Cost Effects

21 Pages Posted: 7 Jan 2017

See all articles by Nadine Ketel

Nadine Ketel

Vrije Universiteit Amsterdam; University of Gothenburg - Department of Economics and Statistics; IZA Institute of Labor Economics; University of Amsterdam; Tinbergen Institute; CEPR

Jona Linde

CREED, Amsterdam School of Economics

Hessel Oosterbeek

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM); Tinbergen Institute Amsterdam (TIA); Institute for the Study of Labor (IZA)

Bas van der Klaauw

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Date Written: December 2016

Abstract

This article reports on a field experiment testing for sunk‐cost effects in an education setting. Students signing up for extra‐curricular tutorial sessions randomly received a discount on the tuition fee. The sunk‐cost effect predicts that students who pay more will attend more tutorial sessions, with possibly beneficial effects on their performance. For our full sample, we find no support for this hypothesis, neither on attendance nor on performance. Results are consistent with a sunk‐cost effect for the subsample of students who, based on hypothetical survey questions, are identified as sunk‐cost prone. We do not find differential effects by students’ income or parental contributions.

Suggested Citation

Ketel, Nadine and Linde, Jona and Oosterbeek, Hessel and van der Klaauw, Bas, Tuition Fees and Sunk‐Cost Effects (December 2016). The Economic Journal, Vol. 126, Issue 598, pp. 2342-2362, 2016, Available at SSRN: https://ssrn.com/abstract=2895183 or http://dx.doi.org/10.1111/ecoj.12297

Nadine Ketel (Contact Author)

Vrije Universiteit Amsterdam ( email )

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University of Gothenburg - Department of Economics and Statistics ( email )

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IZA Institute of Labor Economics ( email )

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University of Amsterdam ( email )

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Tinbergen Institute ( email )

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CEPR ( email )

London
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Jona Linde

CREED, Amsterdam School of Economics ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Hessel Oosterbeek

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM) ( email )

Roetersstraat 11
Amsterdam
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+31 20 525 4242 (Phone)
+31 20 525 5283 (Fax)

HOME PAGE: http://www.fee.uva.nl/scholar/oosterbeek/

Tinbergen Institute Amsterdam (TIA)

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Rotterdam, 3062 PA
Netherlands

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Bas Van der Klaauw

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6120 (Phone)
+31 20 444 6005 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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