Informing Demand: What Do Consumers Know About Postsecondary Options? Andrew P. Kelly Center on Higher Education Reform American Enterprise Institute

Markets in Theory, Markets in Practice Voucher-driven market should drive competition But only if prerequisites in place: –Consumers are informed –Low barriers to entry Are they?: In the absence of market competition, calls to move away from vouchers.

Three Studies of Consumer Info 1.Do parents know how much college costs at different kinds of colleges? 1.Do parents respond to information about institutional quality? 1.What do adults w/o a postsecondary degree know about the costs and likely returns to different options?

1. Parent Estimates of College Costs

2. Information Effects Parents of high school-age children randomly assigned to receive graduation rates for two public four-year colleges. Five most populous states divided up into regions, pairs of similar colleges chosen for each region. Compare preferences: “Which college would you rather your child apply to?

2. Information Effects

3. Coming Up: What Do Adults W/o Degrees Know About Options? Survey of 2,000 adults without a postsecondary degree. Using GfK Knowledge Panel: Rolling, internet-based cross-section of the country. Survey in the field this week.

3. What Do Adults W/o Degrees Know About Options? Survey asks about costs: –Perceptions of college costs at community colleges, for-profits, four-year colleges –What should it cost to attend various institutions? –What amount of debt is reasonable to take on?

3. What Do Adults W/o Degrees Know About Options? Survey asks about returns: –Perceptions: what do graduates from various programs earn in the labor market? –Focuses on sub-baccalaureate credentials, and academic vs. technical associate degrees.

3. Informational Experiment Randomly assign respondents to get earnings information from particular fields of study and degree programs. Use data from 9 states with linkage between postsecondary education and wage records. Series of outcome measures: preferences, willingness to pay, etc. 4-week follow-up.