Research On The Rural Household Decision-making Of Higher Education Investment

In the era of knowledge economy, science, technology and education are the main force to promote economic development. The development of higher education has become the basic of Sci-tech innovation and the training of personnel. In the 21st century, China's higher education has made an unprecedented large-scale development through increased enrollment, the share system of higher education funding. Families are becoming more enthusiastic to invest on higher education, and the family investment has been essential for the development of higher education of our country. But at the same time, the investment risks of higher education have risen gradually, apparently caused by the increasing enrollment and unbalancing employment structure, which made it difficult for university students to find a job. The irrational investments of higher education have increased gradually. In this context, what is the status of the rural household decision-making on higher education investment, how to guide rural household to invest rationally on higher education, how to avoid investment risks and improve investment yields of higher education, how the state design policies to guide the family investment on higher education, is the issues worth studying.This paper conversed the research paradigm of the traditional economics, taking the major theories of the Behavioral Economics as a guide, which get the rapid development in the past 30 years. Under the hypothesis of decision-maker's"bounded rationality"and higher education investment is risking, this paper elaborated the rural household's higher education investment decision environment, analysis the reason why the decision-maker has"bounded rationality", how far can the"bounded rationality"go, inspected the characteristics and the process of rural households'higher education investment decision-making, analysis the two important points in process carefully. We do this by theoretical analysis, economic experiments, survey and other research methods. Through comparison of urban and rural household to find the degree of bounded rational investment decision-makers of rural household achieve; Then, using structural equation modeling to explore the factors which affects the decision-making on higher education investment of rural household, and on this basis, giving some research on when the higher education investment begins, how to determine the beneficiaries of the investment, how the mental accounting affect the decision-making process of rural household, why there is some abnormal phenomenon such as over-confidence and neglecting risk, from a perspective of Behavioral Economics. And this will give a real decision-maker of higher education investment. At the last, we provide some risk alerts, references of decision-making and investment guides. We suggest that the government should give higher education investment policy, provide advice and recommendations to guide the rural household to invest correctly.This dissertation includes 8 chapters.Chapter 1 Introduction. Gives the purpose, topic, and methods of this research.Chapter 2 gives the simple introduce and evaluation to the basis theory of the research. It includes the main contents of Behavioral Economics, the Prospect Theory, the Mental Accounting Theory and the Heuristic and Bias. Give the meaning of the theory to higher education investment decision-making of rural household.In Chapter 3, this paper analysis the social environment which affecting the higher education investment decision-making of the rural household. The rapid development of higher education has provided more opportunities for investment. The increasing of farmers' income improved their investment ability; The reform of university charge system has aggravated the burden of investor; The difficulty of university student to get employed reduce their prospected investment yield.Chapter 4 is about the rationality of the decision maker. It criticized the"entirely rationality"hypothesis of the traditional economics first, and then gives a brief review to the concept and development of"bounded rationality", analysis to the internal reason of decision-makers'"bounded rationality". According to their initiativeness, the bounded rationality of decision-makers can be divided into two categories, one is"bounded rationality of can't"and the other"bounded rationality of don't". Further more, through the comparison of urban and rural families we find that the degree of the rationality of rural higher education investment decision-makers is at a relatively low level.In Chapter 5, we carried on the analysis the particularity of the household education investment's first, build up a theoretical model of investment decision-making procession. And then we analysis the special nature of the households'investment on higher education. After that, from the perspective of behavioral economics, we analysis the three stages of higher education investment decision-making process: whether the household invest, invest to whom, how to invest. Research shows that rural household has a strong intention to invest on higher education, and did not give an analysis of the costs and benefits of investment on higher education in the decision-making process. In the process of choosing of whom will be invested, the bounded rational parents often take"choosing the best heuristic", and they general focus only on their children's academic performance, and do not compare differences in the cost and benefits carefully. This did not decline the quality of rural families'higher education investment decision. There is mental accounting in the process of decision-making of rural households'investment on higher education, but the mental accounting of them has simple structure. When the household face the state of constrained family income and credit circumstances, the mental accounting will not happen sometimes.Chapter 6, we give the advantages and disadvantages of the structural equation modeling (SEM)methods, and its usefulness of it in the research of households'investment decision-making of higher education, and then using SEM to find all the various factors which will affect the rural households'higher education investment decisions and the relationship between them. We find that, perceived cost based on the real cost does not affect the decision-making; perceived risks, the willing of the children and perceived perception will affect rural households'investment decision-making on higher education. The Representation Heuristic and Availability Heuristic influence the decision-making of rural households'higher education investment; The rural household decision-maker also has mental accounting phenomenon, but the structure of their mental accounts is simple, the psychological budget characteristic is not obvious, indicated that in the restraint situation of household income and credit, the psychological accounts has the tendency to merge and simplify.In Chapter 7, this paper analyzed the abnormal phenomenon in the process of rural households'higher education investment decision-making. The rural household has the strong aspiration to invest in the higher education, and the avoiding of the bigger regrets is the primary cause. The family decision-maker's over-confidence and paying more attention to"the main consideration aspect"can cause to the neglecting of higher education investment risk.Chapter 8 gives the basic conclusions of this study, summed up the note and the corresponding policy advice and guidance. Synthesize measures must be taken to provide a good environment for the rural household to make higher education investment decision; Raises their educational level; Encourage and pay more attention to the study of higher education investment decision-making. And some relevant departments should strengthen information construction, make policy advocacy, disclose information, to construct an relatively plenary decision-making environment in order to make household achieve a rational investment decision-making; The government also should encourage the relevant agencies to provide professional advisory services to the investment decision-making; Rural household investors should strengthen their learning, collect plenty of information to improve their level of rationality in decision-making procession.