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ISET Economist Blog

A blog about economics in the South Caucasus.

The Educational Choices We Make...

Like many, I like having more choice, but hate making choices. As a result, many of the most important choices in my life, including the choice among alternative partners, have been made for me by … others.

A 2010 New York Times article Too Many Choices: A Problem That Can Paralyze describes the findings of an experimental study by Sheena Iyengar, a Columbia Business School professor, which suggests that the problem of choice is indeed much more complicated than the standard textbook “truth” we are teaching ISET economics students. Here is how the experiment is described in NYT:

“In a California gourmet market, Professor Iyengar and her research assistants set up a booth of samples of Wilkin & Sons jams. Every few hours, they switched from offering a selection of 24 jams to a group of six jams. On average, customers tasted two jams, regardless of the size of the assortment…
Here’s the interesting part. 60% of customers were drawn to the large assortment, while only 40% stopped by the small one. But 30% of the people who had sampled from the small assortment decided to buy jam, while only 3% of those confronted with the two dozen jams purchased a jar.”

What the study shows, according to Prof. Iyengar, is that the presence of choice might be appealing, yet, in reality, people are finding more and more choice to actually be debilitating.


CHOOSING UNIVERSITY EDUCATION

If experienced consumers are troubled by the choice of jam, wine or cheese in a gourmet market, think of 18-year old Georgian kids facing one of the most defining choices of their lives, that of an education. Furthermore, imagine how many of them must feel making this choice:

  • in a country that is going through a radical and highly unpredictable process of structural change;
  • having observed their parents’ human capital (and social status) evaporating in the process of Georgia’s economic collapse and “jobless growth”; and
  • lacking reliable information on the quality and relevance of educational institutions and programs (and not being able to rely on the parent generation for advice).


As argued by Nino Doghonadze and Florian Biermann in On Imitation, Forbidden Fruits, and Sour Grapes, one possible way out of this conundrum is to “apply a simple decision rule called the imitation heuristic: “If you are clueless about what to do, do what everybody else does.” If everybody studies law, then there must be something good about that subject. Legions of people cannot err.”

Following the herding instinct – doing what others do – may be a great way out for many a 18-year old decision-makers, yet it is worth considering what type of education is in fact chosen as a result. A cursory look at the educational choices of talented Georgian youth suggests that until this year a very large share of students have been essentially postponing the choice of future occupation. Just like consumers in Prof. Iyengar’s experiments, young Georgian have been choosing to go for general university degrees that do little in the way of professional training, narrowly defined. Instead of studying organic chemistry, soil sciences or civil engineering, students opted for general business and social science programs that (maybe) improved that basic computer literacy, some knowledge of foreign languages, and familiarity with simple concepts in management, law and international relations.

It is important to note that the decision not to decide, i.e. postpone one’s educational choice, may be considered rational in the absence of reliable information about the future labor market conditions, quality of educational programs, and, most significantly, own ability and interest at 18. It may be indeed rational to keep one’s options open, and decide later. It may also be rational to acquire general skills and qualifications, such as foreign language and math (the language of science), that could open up higher quality educational options abroad.


GOING FORWARD

The low quality of Georgia’s labor force is picked up by all business surveys (e.g. by the World Economic Forum’s Executive Opinion Survey, 2012) as the second most troublesome aspect (after the cost of finance) of the country’s business environment. Thus, figuring out a way to improve the educational choices facing Georgia’s young generation should definitely be a top priority for the government.

Given the lack of reliable information about alternative options and the genuine difficulty of deciding, young people can be nudged into making particular educational choices by a government policy that restricts the set of available (fully-funded) options. For example, such a policy was introduced in the latter years of Saakashvili administration when engineering programs were given priority in the allocation of government grants. The main drawbacks of such a policy are that a) the government is often groping in the dark as far as future labor market conditions are concerned, and b) locking young people into low quality engineering programs does not really solve any problem.

Another way to inject greater efficiency into the higher education system would be to shorten the duration of general university programs from 4 to 3 years. The main practical purpose served by general university education is to postpone the choice of future occupation until such time that young people are better informed about own abilities and preferences. This purpose is beautifully served by the first three years of any standard undergraduate program.

Finally, the government, businesses and private philanthropists could invest in the quality of certain educational programs and thus help students – of all ages – to make the right choice. For example, Kaha Bendukidze’s investment in the former State Agricultural University did increase students’ interest in agribusiness-related education. Improved education quality is also the express purpose of the second Millennium Challenge Compact, which Georgia has recently signed with the US government. Targeting IT, civil engineering and agronomy, the MCC Compact is certainly a step in the right direction. Yet, it is not at all clear whether this step will be big enough to produce sustainable changes.

Let us hope that in a few years time, Georgian students will be bewildered by the need to choose among a score of excellent, world class programs. For the moment, Georgia’s higher educational environment only offers a bewildering illusion of choice.

Merry Christmas and happy new 2014 to all of us!

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Guest - Lasha on Monday, 13 January 2014 23:46

Just love Introduction. From that convincing example, it is clear that with so many options to choose from, people find it very difficult to choose at all. The other negative effect of having too many choices is that even if we manage to overcome the paralysis and make a choice, we end up less satisfied with the result of the choice then we would be if we had fewer options to choose from. There are several reasons for that: first, the more options there are, the easier it is to regret anything at all that is disappointing about the option that you chose. Second, what we call opportunity cost, the way in which we value things depends on what we compare them to, so when there are lots of alternatives to consider, it is easy to imagine the attractive features of alternatives that you reject that make you less satisfied with the alternative that you've chosen.

Just love Introduction. From that convincing example, it is clear that with so many options to choose from, people find it very difficult to choose at all. The other negative effect of having too many choices is that even if we manage to overcome the paralysis and make a choice, we end up less satisfied with the result of the choice then we would be if we had fewer options to choose from. There are several reasons for that: first, the more options there are, the easier it is to regret anything at all that is disappointing about the option that you chose. Second, what we call opportunity cost, the way in which we value things depends on what we compare them to, so when there are lots of alternatives to consider, it is easy to imagine the attractive features of alternatives that you reject that make you less satisfied with the alternative that you've chosen.
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