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The Role of Information in College Saving Decisions: A Principal-Agent Approach

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2015, Master of Science, Ohio State University, Human Ecology.
In this study, I investigate whether and how much parents save for their children’s college when they have more information about the costs and benefits of college. I combine data from Consumer Expenditure Survey, 2004 – 2012, Simmons National Consumer Survey, and a self-collected dataset of magazine articles. Using principal-agent model, the paper first lays out the theoretical framework and predicts that parents with different amount of information about the costs of college or about the available scholarship will have different saving behaviors. Further, these saving behaviors will also vary with the demographic characteristics of households holding the same amount of information. Results show that there is indeed heterogeneity among different groups of parents. The marginal effect of information affects the amount of and share of resource allocate to the annual principal payments for their home mortgage. Specifically, there is a sharp contrast between families with lower income and families in the highest income group in the sample. Parents with some college education or college degree are more sensitive to information about the costs of college, while parents with no college education at all are more sensitive to information about available scholarships. Comparing parents with different race/ethnicity, information about the available scholarships have the largest marginal effect on Hispanic parents, then on the non-Hispanic, non-Black parents, and least on black parents with children younger than 16. With the only consideration of the number of children are about to go to college, there are not many significant marginal effects of information among parents with more children who are 16 or 17 years old. However, information shows consistent marginal effects on the non-Black, non-Hispanic parents who have at least one child is ready to go to college.
Dean Lillard (Committee Chair)
Sherman Hanna (Committee Member)
Andrew Hanks (Committee Member)
95 p.

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Citations

  • Shang, B. (2015). The Role of Information in College Saving Decisions: A Principal-Agent Approach [Master's thesis, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1429886560

    APA Style (7th edition)

  • Shang, Botong. The Role of Information in College Saving Decisions: A Principal-Agent Approach. 2015. Ohio State University, Master's thesis. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1429886560.

    MLA Style (8th edition)

  • Shang, Botong. "The Role of Information in College Saving Decisions: A Principal-Agent Approach." Master's thesis, Ohio State University, 2015. http://rave.ohiolink.edu/etdc/view?acc_num=osu1429886560

    Chicago Manual of Style (17th edition)