Etapa de desmuntatge. Subetapa de desmuntatge de continguts

Initially, several regressions were run with the dependent variable being a binary variable indicating if the young person was at university in wave 6. Separate models were run for the two family background measures (gross family income and family social class), the two debt-aversion types (value- based debt aversion: “Owing money is always wrong” and risk based debt

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aversion: “Once you get into debt it is often very difficult to get out of it”, as well as a model without any measure of debt aversion) and for males and females: 12 models in total.

In all models, controls were included for ability as measured by test scores at age 11, parental education, ethnicity, living in an urban area, having a long-term health problem or disability, region of residence, whether the family is a non-traditional family (for example, if the parents are divorced) and the number of siblings. The variables included as controls generally have expected signs and significance levels. The full results for the six models using family income can be found in appendix A. Ability is proxied by test scores at age 11 (key stage 2). These are divided into quintiles and there is a strongly significant relationship, with the parameter values rising for each category. Ability is, as expected, strongly positively correlated with university participation. Furthermore, ethnicity is also very important, with Indians and Bangladeshis respectively having odds of being at university more than 4 times and 3 times greater than the odds of the base group (whites). Having a health problem is statistically insignificant, possibly because the sample size of those with this problem is quite small (7.5%). The number of siblings has a negative and precisely measured effect, with the odds ratios falling further from unity as the number of siblings increases. If the home is a non-traditional family, the young person is also less likely to be at university in wave 6. Having a father or a mother with a degree has a precisely measured positive impact, and the effect of the father’s degree is stronger than that of the mother’s (for females as well as males, in fact, for females the effect of the mother’s degree is not statistically significant). Young people from rural areas are also more likely to attend university in wave 6 than those from urban areas.

Table 3-4: Logistic Regression Results for Gross Family Income and Debt Attitudes – by Gender

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atuni Males Females

(1) (2) (3) (4) (5) (6)

Family Income Groups

1: up to £10,399 # 2: £10,400 to £25,999 1.188 1.151 1.165 1.409** 1.372** 1.376** (0.211) (0.202) (0.208) (0.223) (0.217) (0.217) 3: £26,000 to £41,599 1.591** 1.506** 1.540** 1.605*** 1.591*** 1.566*** (0.287) (0.268) (0.28) (0.275) (0.273) (0.267) 4: £41,600 and above 1.949*** 1.850*** 1.861*** 1.771*** 1.725*** 1.718*** (0.353) (0.33) (0.34) (0.303) (0.297) (0.293)

Owing Money Is Always Wrong Strongly Agree 0.353*** 0.375*** (0.075) (0.079) Agree 0.409*** 0.371*** (0.063) (0.055) Disagree 0.857 0.764** (0.115) (0.099) Strongly Disagree #

Once You Get Into Debt It Is Often Very Difficult To Get Out Of It Strongly Agree 0.937 0.347*** (0.265) (0.113) Agree 1.511 0.469** (0.405) (0.149) Disagree 1.969** 0.708 (0.538) (0.23) Strongly Disagree #

Controls YES YES YES YES YES YES

Observations 4920 4920 4920 4869 4869 4869

R-squared 0.234 0.249 0.242 0.201 0.215 0.209

* p<0.10, ** p<0.05, *** p<0.010, # base category

Exponentiated coefficients; Standard errors in parentheses

(NB: Full results including the control variables can be found in appendix A) Table 3.4 above demonstrates the effects of family income and debt aversion on university participation for males and females. These results show a clear relationship between family income and participation with the odds ratio of young people from the richest family income group at 1.95 for males (1.77 for females) compared to the base of the poorest family income

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group. This relationship is statistically significant at the 1% significance level. Introducing the first debt aversion variable (“owing money is always wrong”) reduces the odds ratios on the family income variables slightly, demonstrating a decreased effect of family income by bringing them closer to one. This is what was expected, as we understand debt aversion to be part of the effect of family income - when it is included explicitly, it captures some of the effect that had previously been included in the coefficients on the family income variables.

The odds ratios for the debt aversion dummies themselves demonstrate a negative relationship between debt aversion and university participation. The highest degree of debt aversion (those who “strongly agree” that owing money is always wrong) has an odds ratio of 0.353 (0.375 for females), indicating that the odds of participation of the most debt averse are 65% (62%) lower than those of the least debt averse (who “strongly disagree” that owing money is always wrong), holding all other variables constant.

Looking at risk-based debt aversion– responses to the statement “once you get into debt it is often difficult to get out of it” –shows an almost identical effect on the family income dummies for males. Once again, the odds ratios move closer to one, indicating the family income variables may have been capturing some of the effect of risk-based debt aversion. In this regression, however, the debt aversion dummies themselves are not statistically significant (except that the difference between “strongly disagree” and “disagree” is precisely measured). Given that this variable represents risk-based debt aversion, it is as expected that its effect on university participation is less marked, given the current UK system of student loan repayment. However, for females, the variable still has a statistically significant effect. The dummy for the most debt averse people has an odds ratio of 0.347 which is statistically significant at the 1% level. This shows their odds of participation are 65% lower than the odds of the least debt averse females.

The fact that the odds ratios on the “always wrong” variables are well below unity and statistically significant for both genders and the “hard out” variables are statistically significant for females indicates that debt attitudes

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impact on university participation, even after other factors are controlled for. Given the literature on the relative unimportance of short-term credit constraints (Carneiro and Heckman, 2003; Dearden et al, 2004), this is an important result. It confirms the findings of Callender and Jackson (2005), that debt attitudes are an important factor affecting the university participation decision.

The next set of regressions uses social class rather than family income. The social class variables are statistically significant for both males and females and show a positive relationship between belonging to one of the higher classes and university participation. Young males with fathers from the highest social class group (higher and lower managerial and professional occupations) have odds of participation 52% higher than males from the lowest classes, while the odds for females are 51% higher. The middle group has odds that are 30% higher for males and 32% higher for females.

On the whole, the results are very similar to the regressions using family income. Considering the regression results for males, the odds ratios on the family class dummies come slightly closer to one when either type of debt aversion is added to the model (although for females there is little change). The odds ratios on the value-based debt aversion variables are statistically significant at the 1% level, revealing the important impact of this kind of debt aversion. The most debt averse have odds of participating that are 65% lower for males (62% for females) than the odds for the least debt averse, while the second most debt averse group has 59% (63%) lower odds than the least debt averse group. Looking at risk-based debt aversion, females who strongly agree have an odds ratio of 0.335 which is statistically significant at the 1% level, while the odds ratio for those who agree is significant at the 5% level. Females seem to be more affected by risk-based debt aversion in this context than males.

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Table 3-5: Logistic Regression Results for Family Social Class and Debt Attitudes – by Gender

atuni Males Females

(1) (2) (3) (4) (5) (6) Family NS-SECs Lowest SECs # Middle SECs 1.300** 1.258** 1.279** 1.318*** 1.315** 1.318*** (0.145) (0.141) (0.143) (0.139) (0.14) (0.14) Highest SECs 1.522*** 1.495*** 1.489*** 1.506*** 1.487*** 1.477*** (0.166) (0.165) (0.164) (0.151) (0.15) (0.149)

Owing Money Is Always Wrong Strongly Agree 0.346*** 0.378*** (0.073) (0.079) Agree 0.407*** 0.369*** (0.062) (0.055) Disagree 0.853 0.762** (0.114) (0.098) Strongly Disagree #

Once You Get Into Debt It Is Often Very Difficult To Get Out Of It Strongly Agree 0.911 0.335*** (0.259) (0.111) Agree 1.473 0.453** (0.397) (0.147) Disagree 1.934** 0.679 (0.532) (0.225) Strongly Disagree #

Controls YES YES YES YES YES YES

Observations 4920 4920 4920 4869 4869 4869

R-squared 0.233 0.248 0.241 0.203 0.216 0.21

Exponentiated coefficients; Standard errors in parentheses * p<0.10, ** p<0.05, *** p<0.010, # base category

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These results show that debt aversion has a negative effect on university participation for both males and females. Someone who believes that “owing money is always wrong” is less likely to be at university straight out of school, and this effect is statistically significant, even after controlling for a broad range of other determinants of participation. Furthermore, among females, the belief that “once you get into debt it is often difficult to get out of it” also has a negative effect on university participation straight out of school.

3.6.1.2 Inclusion of School Performance

As discussed above, school results are highly correlated with family income and of course are strong determinants of participation. Key Stage 2 test scores were included in the earlier regressions as a proxy for ability, as they are the earliest test scores available in the data - the regressions below explore the effect on the debt aversion and family income variables when progressively more school results are included in the regressions, and when the sample is restricted to suitably qualified individuals (defined here as those undertaking two or more A-levels at wave 5).

As expected, the family income variables lose their significance. When key stage 2 and GCSE scores and the number of A-levels taken are included or when the sample is restricted to males taking 2 or more A-levels in wave 5, the family income variables show no statistical significance. This is a similar result to what Chowdury et al (2010) saw using linked NPD, NISVQ and HESA data.

On the other hand, debt aversion still shows a statistically significant effect. Even in the restricted sample, those that “agree” that owing money is always wrong are less likely to be at university than those who “strongly disagree”, with this effect being statistically significant at the 1% level when key stage 2 and GCSE results are included and at the 5% level when the number of A-levels taken is included as well. In terms of the size of the effect of debt aversion on participation, including school results past age 11 brings the odds ratios closer to 1, reducing the size of the effect. This indicates there is a relationship between school results and debt aversion, which may have several sources - firstly, both may well be correlated with

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ability, school results for obvious reasons, and debt aversion because tolerance towards debt (and especially towards borrowing for investment) requires the ability to think ahead, apply discounting etc. Secondly, both may also be correlated with discount rates, as discussed above.

Table 3-6: Logistic Regression Results with School Performance and Other Controls – Males

Sample:

Included School Results: None Key

stage 2 plus GCSEs plus A levels key stage 2 plus GCSEs

Family Income Groups

1: up to £10,399 # 2: £10,400 to £25,999 1.428** 1.151 1.127 1.016 0.837 0.801 (0.232) (0.202) (0.233) (0.206) (0.202) (0.206) 3: £26,000 to £41,599 2.004*** 1.506** 1.395 1.281 1.051 1.009 (0.331) (0.268) (0.288) (0.259) (0.259) (0.263) 4: £41,600 and above 2.748*** 1.850*** 1.448* 1.241 1.041 0.898 (0.459) (0.332) (0.298) (0.252) (0.253) (0.23)

Owing Money Is Always Wrong Strongly Disagree # Strongly Agree 0.246*** 0.353*** 0.607** 0.736 0.66 0.919 (0.05) (0.075) (0.14) (0.177) (0.197) (0.304) Agree 0.296*** 0.409*** 0.581*** 0.640** 0.574*** 0.630** (0.043) (0.063) (0.098) (0.112) (0.112) (0.127) Disagree 0.812 0.857 1.056 1.096 1.021 1.105 (0.103) (0.115) (0.155) (0.167) (0.168) (0.188)

Controls YES YES YES YES YES YES

Observations 4920 4920 4920 4920 2040 2029 R-squared 0.157 0.249 0.367 0.404 0.089 0.14

Exponentiated coeff icients; Standard errors in parentheses * p<0.10, ** p<0.05, *** p<0.010, # base category

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Table 3-7: Logistic Regression Results with School Performance and Other Controls – Females

Sample: All Females At least 2 A levels

Included School Results: None Key

stage 2 plus GCSEs plus A levels key stage 2 plus GCSEs

Family Income Groups

1: up to £10,399 # 2: £10,400 to £25,999 1.528*** 1.372** 1.105 1.198 1.107 0.976 (0.231) (0.217) (0.194) (0.212) (0.258) (0.241) 3: £26,000 to £41,599 2.017*** 1.591*** 1.229 1.323 1.305 1.117 (0.327) (0.273) (0.23) (0.251) (0.322) (0.29) 4: £41,600 and above 2.484*** 1.725*** 1.208 1.226 1.263 1.045 (0.408) (0.297) (0.227) (0.232) (0.308) (0.269)

Owing Money Is Always Wrong Strongly Agree 0.225*** 0.375*** 0.513*** 0.618** 0.559* 0.608 (0.045) (0.079) (0.121) (0.149) (0.17) (0.191) Agree 0.261*** 0.371*** 0.527*** 0.600*** 0.557*** 0.639** (0.038) (0.055) (0.084) (0.101) (0.111) (0.13) Disagree 0.661*** 0.764** 0.905 0.955 0.833 0.904 (0.084) (0.099) (0.124) (0.139) (0.138) (0.151) Strongly Disagree #

Controls YES YES YES YES YES YES

Observations 4869 4869 4869 4869 2355 2351 R-squared 0.137 0.215 0.328 0.372 0.07 0.114 Exponentiated coefficients; Standard errors in parentheses

* p<0.10, ** p<0.05, *** p<0.010

School results reflect a person’s ability, their level of motivation and determination (which is also linked to intentions for future study), their discount rate, the benefits derived from their family background, and many other factors. As we are not interested in the rather more obvious relationship between school results and participation per se, but rather in the relationship between family income and participation and debt aversion and participation (and later – debt aversion and participation by family income group), the preferred specification of this model includes school results only in as far as they are required to control for innate ability. This

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allows for the effects of family income and debt aversion to be reflected more fully in the parameter estimates for those variables. All the same, it is important to note that the “agree” dummy on debt aversion is statistically significant in all relevant specifications (i.e. even when all available school results are included in the regression).

3.6.1.3 Predicted Probabilities

Using the preferred specification of the logistic regressions, which includes key stage 2 results and the other controls (but not GCSE or A level variables), to calculate the probability of being at university in wave six while holding the control variables constant13 _{gives us predicted}

probabilities by gender, family background group and debt attitude. Figure 3-10: Participation Probabilities by Value-Based Debt Attitude, Gender and Family Background

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I calculate probabilities for someone who is white, of median ability, where neither parent has a degree, they have no siblings and do not come from a broken home, who lives in an urban area (in fact, London) and has no long-standing health problem or disability. Calculating probabilities for the average individual – all variables at means – gives very similar results.

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Predicted probabilities are summarized in the graphs above. I focus on value-based debt aversion as this had the clearest results from the logistic regressions. These graphs show that there is a large difference in participation probability across all income groups and socio-economic backgrounds for those who (strongly) agree and (strongly) disagree that “Owing money is always wrong”, even after controlling for a broad range of other factors. Both males and females who agree with this statement are less likely to be at university straight out of school. There is no large difference for those who agree / strongly agree or those who disagree / strongly disagree, but between those who agree and those who disagree, the difference in participation probability is very clear and economically significant. The next section will explore whether this effect is greater for young people from disadvantaged backgrounds.