| Popis: |
Policies need not only to be well designed to effectively address market failures, but their parameters also need to be part of agents' information sets. This is illustrated by government student loans in the Netherlands which are intended to alleviate liquidity constraints. Despite generous loan conditions, take-up rates on these loans are low. Some have argued that this is due to limited knowledge about these conditions. We examine the importance of information constraints through a randomized experiment. Half of the students who responded to an Internet questionnaire were given factual information on loan conditions, whereas the other half did not receive such information. Six months later, students who received information have better knowledge about the loan conditions. While OLS regressions reveal a large and significantly positive association between knowledge about loan conditions and borrowing, our instrumental variable estimates suggest that this is not a causal effect which would rule out that the low take-up rate is caused by information constraints. Policies need not only to be well designed to effectively address market failures, but their parameters also need to be part of agents' information sets. We study student loan behavior in the Netherlands where i) higher education students know little about the conditions of the government's financial aid program and ii) take-up rates are low. We conducted a field experiment in which we manipulated the amount of information students have about these conditions. Half a year after the treatment the same students were interviewed again. The treatment has no impact on loan take-up. This zero impact is not due to students already having decided whether to take a loan or not, and can also not be attributed to treated students not absorbing the information that is given to them. We provide the interpretation that communicating eligibility criteria rather than precise programme details should be prioritized. |
