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Whitney A. Browne
"The Price
Sensitivity Exhibited by Admitted St. Lawrence Students"
May 13, 2004
Senior Honors
Thesis
St. Lawrence
University
First Reader: Dr. Brian Chezum
Second Reader: Dr.
Alison Del Rossi
Abstract:
This paper
examines the sensitivity of admitted students at St. Lawrence
University to
changes in cost of attendance. More
specifically, the study will investigate the effects of an increase in
tuition
on the probability of a student enrolling.
In order to perform this test, econometric models and procedures are
used to estimate the probability that a given student will attend St.
Lawrence
University. Next a tuition increase is
introduced by adjusting the actual cost of attendance at St. Lawrence,
relative
to each student’s alternative institution cost.
The probabilities found previous to the tuition increase are compared
to
those found post-increase and the elasticity of the demand is
calculated. The results show that there is a response by
admitted students to increases in tuition.
Before the Newell center was built, the tuition increase caused a drop
in the proportion of students who enroll, and admitted students are
elastic in response
to actual out-of-pocket cost increases.
As a result, prior to the new facilities on campus, by raising tuition
St. Lawrence University failed to reap increased revenues.
However, the elasticity of demand exhibited
by students is decreasing (in absolute value) over time, thus there is
an
indication that the capital, including buildings and athletic
facilities built
over the last five years, is effectively
increasing the value of St. Lawrence in the eyes of admitted students.
Table of Contents
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Appendix A:
Appendix B
Appendix C:
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Introduction
3
Review of the
Literature
6
Aggregate Demand
Studies
9
Individual Demand
Studies
17
Meta-Analyse
22
Data
and
Methodology
25
Empirical
Results
31
Elasticity
37
Conclusions
39
Bibliography
41
Tab;e 1: Description of
Variables Used in Empirical Analysis
Table 2: Statistical Summary of Variables Used in Empirical
Analysis
Table 3:
Expected Sign for Each Variable
Table 3: Correlation
Matrix –
Financial Data
Table 4: Correlation
Matrix –
Financial Data
Table 5: Correlation Matrix –
Possible Variables for Final Model
Table 6:
Summary of Regression, Marginal Effects, Standard Errors (in
parentheses) and
P-values
Table 7: Summary of
Regression, Accuracy of Prediction
Table 8: Prediction Equation
Regression Output
Table 9: Predication Equation –
Marginal Effects
Table 10: Prediction Model -
Accuracy Table
Table 11: Elasticity Estimates, 1%
Increase in Actual Cost
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