The Role Of Irrational Exuberance In Rising Tuition Prices

Open Access
Author:
Myra, Clinton Jacob
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Sajay Samuel, Thesis Supervisor
  • James Alan Miles, Honors Advisor
Keywords:
  • tuition prices
  • higher education
  • decision model
  • tuition increases
  • student debt
Abstract:
This paper explores the possibility that “irrational exuberance” on the part of students contribute to the large tuition increases in higher education over the last three decades. I examine this thesis by using a decision model to capture the costs and benefits to a student of obtaining a college degree. I use SAT scores as a proxy for future earnings to evaluate the alternatives and opportunity costs for students. Using a sensitivity analysis for select variables in the decision model helps provide further indication of what factors have the greatest impact on the decision presented to students.