Economics of Education Review 20 2001 15–26 www.elsevier.comlocateeconedurev
Rational choice under unequal constraints: the example of Belgian higher education
Denis Rochat
a,b,
, Jean-Luc Demeulemeester
c
a
University of Cergy-Pontoise, 33 Boulevard du Port, F-95011, Cergy-Pontoise Cedex, France
b
CREBM Brussels, 27 rue Medaets, B-1150 Brussels, Belgium
c
Department of Public Management, CP 145-Universite´ Libre de Bruxelles, 19 avenue F. Roosevelt, B1050, Brussels, Belgium Received 21 May 1997; accepted 22 February 1999
Abstract
The virtues of laisser faire in the sphere of educational choices appear these days more and more doubtful when one looks at the apparently irrational students preferences for fields in low demand on the job market. In this paper,
we try to give empirical content to the thesis advanced by Mingat and Eicher Mingat, A., Eicher, J.C., 1982. Higher education and employment markets in France, Higher Education 11, 211–220, who suggest that students do not only
take expected economic returns into account when choosing a discipline, but also their mere chances of academic success. If one assumes that more remunerative orientations are also riskier, and that poorer students give a heavier
weight to the risk-component than richer ones, then one can reconcily economic rationality with labour market mis- matches. Using a three-step methodology based on Lee’s work Lee, L.F., 1983. Generalized econometric models with
selectivity. Econometrica 51, 507–512, this is precisely what we find. We show that this result has important policy implications, as tending at equalizing opportunities will make poorer students less sensible to the risk component and
more concerned with market needs.
2001 Elsevier Science Ltd. All rights reserved.
JEL classification: I20; J24 Keywords: Chance of success; Equity; Efficiency; Labour market; Higher educational choices
1. Introduction
There is currently a very heated debate in Western Europe concerning both the efficiency internal as well
as external and the equity of higher education systems. They are under heavy pressure to reform in various Eur-
opean countries such as the United Kingdom, Germany or France
1
due to their alleged inefficiency, and their
Corresponding author. CREBM Brussels, 27 rue Medaets, B-1150 Brussels, Belgium.
E-mail address:
crebm Fbrusselshotmail.com
D. Rochat.
1
See for example Economist 1997 for a general dis- cussion, as well as Die Zeit, no 29, 9 July 1998.
0272-775701 - see front matter
2001 Elsevier Science Ltd. All rights reserved. PII: S 0 2 7 2 - 7 7 5 7 9 9 0 0 0 4 6 - 1
inability to cope with the large-scale economic trans- formations of the day. Moreover, they are accused of
being extremely costly to the general taxpayer OECD, 1993a while primarily benefiting the children of well-
off families. This heavy burden on the Treasury is parti- cularly badly resented in a period of hard budgetary con-
straints linked with the desire to achieve EMU within the prescribed agenda set up by the Treaty of Maastricht.
Another criticism frequently addressed to higher edu- cation systems is that the huge associated financial cost
is partly due to a vast amount of internal waste, linked with huge participation and concomitant failure and
drop-out rates OECD, 1993b. Too many youngsters are participating in university education some authors even
point out the dangers of over-education, Hartog and Oos- terbeek, 1988; Alba-Ramirez, 1993; Beneito et al., 1997
16 D. Rochat, J.-L. Demeulemeester Economics of Education Review 20 2001 15–26
and at the same time participating in higher technical and vocational orientations Oosterbeek Webbink, 1997.
The orientations most demanded by the economy including also the engineering and computing sciences
orientations at the university are less frequently chosen than human and social sciences, although the latter do
not offer many occupational opportunities see the recent concerns expressed by the Report of the “Groupe de
re´flexion sur l’e´ducation et la formation” to the European Commission in December 1996, p. 26. Therefore higher
education systems are criticized for performing badly in providing the economy with the skills it needs Glytsos,
1989, both quantitatively and qualitatively.
The latter element leads us to question the degree of economic rationality embodied in student choices, and
therefore the suitability of a laisser faire system. If some authors are doubtful vis-a`-vis the rationality of students
expectation formation mechanisms see Manski, 1995, others point out to the necessity of integrating equity and
efficiency considerations in order to properly evaluate the students behaviors. The inefficiencies observed on
the
educational and
subsequently labour
markets mismatches between the skill supply and the market
needs should not be so hastily attributed to the irration- ality of the students. Indeed, the students might at the
same time be perfectly rational and nevertheless decide to choose apparently low-return orientations as Humani-
ties, Arts or Education in continental Europe.
2
The weight of the social background of the students, in other
words equity considerations, can partly explain appar- ently such “bad” orientation choices. In a pioneering
paper, Mingat and Eicher 1982, drawing from the insights of the CAPM financial theory, assumed that stu-
dents operate a trade-off between the risk and return components of the orientation choice. If one assumes that
orientations with a higher rate of return i.e. which are in demand on the labour market are also more difficult,
and that students coming from poorer socio-economic background Mingat Eicher, 1982 are also more risk-
averse i.e. they give a heavier weight to the risk compo- nent in their computations than wealthier students, than
one should observe that less privilegiated students will choose less risky i.e. less difficult or shorter and there-
fore also less remunerative orientations.
3
The inef-
2
One should keep in mind that employers in some countries UK, Japan rely much more on the relative reputation of insti-
tutions rather than on the precise subject chosen by the student when evaluating prospective applicants for a job. In such a con-
text, it might be better to get a degree in arts from a well-known institution than an engineering degree from a second-class uni-
versity see on this topic, Knapp, 1995, p. 130.
3
Besides Mingat and Eicher 1982, recent important contri- butions were made by Mortenson 1990 and Altonji 1993.
Mortenson 1990 notes, that low-income families may be more risk-averse and that the latter could explain their reluctance to
ficiencies observed on the labour markets could then be compatible
with a
rational individual
behaviour Oosterbeek Webbink, 1997.
4
Mutatis mutandis, one could advance a very similar explanation in terms of ability, another important
resource constraining the students free choice of disci- plines. Some subjects might be simply less academically
demanding, i.e. less difficult or less abstract than tech- nical ones. Students of lower ability might prefer such
orientations rather than more demanding ones because they expect higher chances of success in such subjects.
Here also this choice results from a risk-averse strategy, and an avoidance of more difficult subjects, i.e. riskier
ones for less able students. In this line of thought, stu- dents avoid more rewarding orientations because they
feel they are not sufficiently able to succeed.
The results of such kind of researches could be extremely important in terms of policy-making. If the
thesis of Mingat and Eicher 1982 is right, it would be wiser for the State to try to limit as much as possible
the weight of the social background of the students through
some “corrective”
measures as
positive discrimination. An educational policy aimed at increas-
ing equity would also be the best means to increase efficiency in terms of the skills provision to the econ-
omy. However, if the ability explanation is true, then the State could only improve upon the current state of affairs
only as much as acquired ability is responsible for it innate ability cannot be changed by assumption. The
former is indeed partly conditioned by the social and cul- tural background of the students, and an increased invest-
ment in primary and secondary education might be fruit- ful in alleviating the impact of a poorer family
background.
This paper tries to provide some pieces of answer in this debate by evaluating the impact of expected chances
of success in the students discipline choice process. Moreover, we will also try to take into account the role
of socio-economic background versus ability in the choice behaviour of the students.
2. Empirical methodology
