Biases and willingness to take a student loan: A behavioral economics approach

Document Type : Research Paper

Authors

1 ilam university

2 Ilam University

Abstract

The main purpose of the present study is to investigate the effect of behavioral economics biases on the willingness to register a loan application among students. For this purpose, a 2x2x2 factorial model including; two levels of framing (positive or negative), two levels of need for a loan ( present bias or no bias) and two levels of probability of time limit (high or low probability) were considered. Independent variables include; positive frame, urgent need for a loan and high probability of time limit and dependent variable is willingness to take a student loan. The random sampling of this research includes 400 students of Ilam and Allameh Tabatabai university. The results of the estimation of the models showed that the present bias variable significantly increases the willingness to loan; That is, the urgent loan status increases the willingness of the loan due to people's bias. But the positive frame variable does not independently affect the willingness to loan in the whole sample. Examining the variable of positive frame in common conditions with other factors also showed that positive frame in common conditions of low probability of time limit and non-bias has a positive effect on willingness to loan. This means that in this situation, since students are not biased, they are more influenced by framing (especially positive framing). The results of this research contain messages for policymakers in the field of higher education to use behavioral economics tools to motivate and encourage students to use welfare facilities.

Keywords

Quarterly Journal of Applied Theories of Economics

Articles in Press, Accepted Manuscript
Available Online from 04 March 2024

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