How much does a higher education in economics cost? DCE evaluation of the individual (dis)utility of studying

Abstract

The paper adds to the literature on the costs of higher education by estimating an individualised valuation of time spent studying. This valuation, in addition to the direct costs and the forgone earnings, allows us to assess the overall costs of undertaking higher studies, which is crucial for accurately estimating the rate of return to education and understanding the mechanisms of human capital accumulation. We use a discrete choice experiment (DCE) to evaluate the disutility of time spent studying by a group of students of economics in a leading Central European university. We investigate the heterogeneity of preferences towards time allocation across genders. We estimate the parameters of the students’ utility function assuming a random utility model using multinomial logit (MNL) and random parameter logit (RPL). We found that for students of economics studying for an additional hour resulted in a disutility worth around EUR 2.95, which is a rough equivalent of the minimum net hourly wage rate in Poland. This value is however higher than the value attributed to the disutility related to an hour spent at work. The estimated value was strongly heterogeneous, depending on students’ personal characteristics.