Subsidy Shock: Reframing Judgments of College Sticker Prices

Abstract

Three studies tested the hypotheses that (a) people think college tuition is too high, (b) people know very little about the subsidies colleges provide, and (c) providing people with subsidy information leads them to judge college prices as more reasonable. The results offered qualified support. First, people generally thought that public school charges were reasonable, but that private school charges were unreasonable. Second, people were aware of the subsidies provided by public schools, but were often unaware of those provided by private schools. Third, after receiving subsidy information, people increased their reasonableness ratings of private school prices but not public school prices. This was true even when they correctly estimated the private schools' subsidies. Making subsidy information salient seems to reframe reasonableness judgments.

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