Version 2 2024-06-06, 12:06Version 2 2024-06-06, 12:06
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chapter
posted on 2024-06-06, 12:06authored bySN Leaver
The purpose of ‘‘behavioural education economics’’ is to understand the psychological factors
influencing educational choice and how individuals optimise these investments within a cog-
nitively hard and complex decision space. Underlying behavioural education economics is the
understanding that educational decision making is characterised by choices which are usually not
repeated and rely heavily on heuristics to solve complex decisions in the absence of prior learning.
By understanding the decision architecture underlying choices in education, causal mechanisms
can be identified to guide policy interventions to improve academic outcomes which ultimately
influence earnings and other life outcomes such as health. Given that individuals deploy heuristic
based decision strategies to arrive at a ‘‘good’’ outcome in the face of incomplete information and
limited time (Gigerenzer &Goldstein, 1996), it is important to understand the cognitive processes
underlying these strategies and the impact of behavioural biases (Tversky & Kahneman, 1974)
which lead to unintended social and economic consequences. Behavioural biases that can affect
decisions in education include anchoring, framing, loss aversion, the availability heuristic and
prospect theory. Behavioural education economics matters because for the last 30 years rational
choice theory based education policy has failed to generate the expected economic outcomes,
delivering only marginal overall benefits at best.