The determination of public tuition fees in a mixed education system: A majority voting model

• DOI: http://doi.org/10.1111/jpet.12317
• Date: 01 December 2019
• Published date: 01 December 2019
• Author: Didier Laussel,Hejer Lasram

Received: 23 January 2017 Revised: 27 April 2018 Accepted: 27 April 2018

DOI: 10.1111/jpet.12317

ARTICLE

The determination of public tuition fees in a mixed

education system: A majority voting model

Hejer Lasram1Didier Laussel2,3,4,5, 6

1CBS-TunisCarthageUniversity and UR MASE-

ESSAI,Carthage University, Tunis, Tunisia

2Aix-MarseilleUniversity. CNRS, EHESS, Cen-

traleMarseille, AMSE, France

3CNRS,Paris, France

4EHESS,Paris, France

5CentraleMarseille, Marseille, France

6AMSE,Berlin, Germany

Correspondence

HejerLasram, CBS-TunisCarthage University

andUnité MASE-ESSAI, Carthage University,

AvenueFattouma Bourguiba, 2036 La Soukra,

Tunis,Tunisie.

Email:hejer.lasram@gmail.com

DidierLaussel, Aix-Marseille University, CNRS,

EHESS,Centrale Marseille, AMSE.

Email:didier.laussel@outlook.fr

We study the determination of public tuition fees through major-

ity voting in a vertical differentiation model where agents'returns

on educational investment differ and public and private universities

coexist and compete in tuition fees. The private university offers

higher educational quality than its competitor, incurring higher unit

cost per trained student. The tuition fee for the state university is

fixed bymajority voting while that for the private follows from profit

maximization. Then agents choose to train at the public universityor

the private one or to remain uneducated. The tax per head adjusts in

order to balance the state budget. Because there is a private alterna-

tive, preferences for education are not single-peaked and no single-

crossing condition holds. An equilibrium is shown to exist, which

is one of three types: high tuition fee (the “ends” are a majority),

low tuition fee (the “middle” is a majority), or mixed (votes tie). The

cost structure determines which equilibrium obtains. The equilib-

rium tuition is either greater (majority at the ends) or smaller (major-

ity at the middle) than the optimal one.

1INTRODUCTION

The determination of public universities'tuition fees has recently attracted a lot of attention following the dramatic

increases observed in some countries. In England, tuition fees were first introduced in September 1998 under the

(New) Labour Government, with students being required to pay up to £1,000 a year for tuition, and subsequently

raised to a maximum of £3,000 in 2004, then to £9,000 a year in 2012, and finally to £9,250 in 2017.1The suppres-

sion of tuition fees was a key proposal of Jeremy Corbyn's Labour party during the recent British general elections.

In Canada, Shaker and Macdonald (2015) noticed that“tuition fees for Canadian undergraduate students havetripled

between 1993–1994 and 2015–2016”,2withan average increase of 40% in the last decade. In 2002 already, Martin

recorded in the U.S. case an increase in tuition costs3between 1995 and 2002, much faster than inflation or family

income. The same observation was more recently made on the period 2003–2013 by Desrochers and Hulburt (2016)

for U.S. colleges, building on data from The College Board, Annual Survey of Colleges (NCES, IPEDS data): tuition fees

1Notethat the income-contingent loan scheme was extended at the same time tuition fees were dramatically increased.

2Whenadjusted for inflation the increase is 100%. The increases ranged from 35% in Newfoundland to 243% in Ontario.

3Forpublic and private universities.

Journal of Public Economic Theory.2018;1–18. wileyonlinelibrary.com/journal/jpet c

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2LASRAM ANDLAUSSEL

FIGURE 1 Tuitionfees/educational expenditures per student

in 2016 dollars increased from $2,600 in 1976–1977 to $9,650 in 2016–2017 for U.S.public colleges (a 271% increase)

while the increase for private nonprofit colleges was from $10,680 to $33,480 for the same academic years.4

Besides these striking evolutions, the wide cross-country differences in tuition fees currently recorded are also in

searchof an explanation. Marcucci and Johnstone (2007) reported (Table1, page 29) medium public tuition fees for first

degrees rangingfrom zero (Hungary, 2001) to $9,000 (United States, 2004/2005).5This heterogeneity is confirmed by

a recent 2016 article in Times Higher Education6reporting average tuition fees (including administration fees) lower

than £1,000 in Germany,Norway, Sweden, Finland, Austria, and Belgium but greater than £9,000 in the United States

(£31,296), England, Canada, Australia, and New Zealand.

Martin (2002) attributed the observed increase in tuition fees to “the increasing time given to professors for schol-

arship and other activities,” that is, to “increases in noninstructional staff.”For the U.S. case, however, Desrochers and

Hulburt (2016) reported averageexpenditures per student in 2011 dollars roughly stable at public institutions and pri-

vate bachelor ones over the decade 2001–2011 (see online Supporting Information Figure S2) and increasing by only

7% at private master institutions, while at the same time tuition fees in constant dollars increased by 72% at public

master institutions and 25% at private ones. It is not very likely that such modest increases in the cost of trainingmay

have led by themselves to dramatic increases in tuition fees. Cost differentials may also hardly account for the large

observed differences in tuition fees across developed countries, which largely exceedpossible differences in costs for

similar countries. As an illustration, we have plotted for 14 OECD countries the tuition fees against the 2012 public

and private higher education expenditures per student (Figure 1).7

Even more blatantly,we are aware of at least two examples of huge differences between very close “countries.” The

first is between England, where, as already reported, the tuition fees have been increased recently to £9,250, Wales

where students pay only £3,900, and Scotland where theypay nothing. In Scotland, tuition fees were even abolished in

2007, following the devolutionto the Scottish government, when England was already engaged in steeply raising them.

The second example we know of wide differences in averagetuition fees is between the different Canadian provinces:

4Source: College Board, https://trends.collegeboard.org/college-pricing/figures-tables/tuition-and-fees-and-room-and-board-over-time-1976-77_2016

-17-selected-years

5They distinguished between countries without public tuition fees (such as Brazil, Denmark, Germany,Norway, Sweden, among others), countries with up-

front tuition fees (including Belgium, Canada, Chile, Italy,Portugal, United States), and countries with deferred tuition fees (Australia, England, Wales, and

others).

6www.timeshighereducation.com/student/news/cheapest-places-study-top-university

7FromOCED Digest of Education Statistics 2015, Table 605.10, page 873. The expendituresare in current dollars. The tuition fees are in current pounds.The

coefficientof determination R2=0.0562.

LASRAM ANDLAUSSEL 3

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