Balancing the risk of ‘Lazearian’ interrupters and the benefits of educational and social peers: tracing parental preferences for class-size reduction

ABSTRACT

Using Danish survey data from a choice experiment, parental preferences for class-size reduction are estimated. While parents with children in large classes are willing to pay for class-size reduction, parents with children in small classes are reluctant and even express negative utility for further class-size reduction. We interpret this as parents balancing the risk of ‘Lazearian’ interrupters and the benefits of educational and social peers when forming their preferences for class size.

KEYWORDS:

• Willingness to pay
• class-size reduction
• parental preferences
• educational and social peers

JEL CLASSIFICATION:

• C25
• I2
• I22

Acknowledgements

The authors would like to thank our colleagues from Danish Institute for Local and Regional Government Research (KORA), participants in the Journées d’Economie Publique Louis-André Gérard-Varet conference 2014 and Björn Öckert fra Uppsala Universitet for valuable comments. A special thanks particularly goes to Stine Bendsen (Danish Road Directorate), Jørgen Jordahl-Jørgensen (COWI A/S), Morten Hørman (COWI A/S) who carried out the data collection jointly with two of the authors of this article. As always, any errors remaining are the sole responsibility of the authors. The data collection was carried out as a project for KREVI (Danish Evaluation Institute for Local Governments), which is now a part of KORA. The funding body has had no involvement in the preparation of this article.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The WTP for attribute j is estimated the traditional way: β_servicej/β_cost.

² In Denmark, public education is fully tax financed, while private education is partly tax financed and partly financed through school fees. Preschool day care and after school care are however partly tax financed and partly financed through fees. Hence, parents are familiar with out-of-pocket costs despite the high degree of tax financing. Using school fees to obtain estimates of WTP thus seems to be valid.