Marginal Pricing and Student Investment in Higher Education

Steven W. Hemelt, Kevin M. Stange

NBER Working Paper No. 20779
Issued in December 2014
NBER Program(s):   ED   LS   PE

This paper examines the effect of marginal price on students’ educational investments using rich administrative data on students at Michigan public universities. Students facing zero marginal price for credits above the full-time minimum (i.e., 12 credits) attempt and complete about the same average number of credits as those whose institutions charge per credit. Zero marginal price induces a modest share of students (i.e., 7 percent) to attempt up to one additional class (i.e., 3 credits) but also increases withdrawals, resulting in little impact on earned credits or the likelihood of meeting “on-time” benchmarks toward college completion. Consistent with theory, the moderate impact on attempted credits is largest among students who would otherwise locate at the full-time minimum, which include lower-achieving and socio-economically disadvantaged students.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20779

Published: Steven W. Hemelt & Kevin M. Stange, 2016. "Marginal Pricing and Student Investment in Higher Education," Journal of Policy Analysis and Management, vol 35(2), pages 441-471.

Users who downloaded this paper also downloaded* these:
Stange w19183 Differential Pricing in Undergraduate Education: Effects on Degree Production by Field
Ljungqvist and Smolyansky w20753 To Cut or Not to Cut? On the Impact of Corporate Taxes on Employment and Income
Culp, Nozawa, and Veronesi w20776 Option-Based Credit Spreads
Altonji and Mansfield w20781 Group-Average Observables as Controls for Sorting on Unobservables When Estimating Group Treatment Effects: the Case of School and Neighborhood Effects
Barseghyan, Clark, and Coate w20701 Public School Choice: An Economic Analysis
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us