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Sunday, June 22, 2008

Cost of gasoline and bad decisions: positive correlation?

This story from the Arizona Republic focuses on the rather mundane (at least to economists) story that decisions on where to attend college are influenced by more than just tuition and the price of text books. People take into consider the entire costs of attending a particular college, including the cost of travel to and from school. As the price of travel is increasing, it is not a surprise that at least some people would decide to stay closer to home for their college education.

However, there are some decisions that, at least on the surface, seem to be non-sensical. For example:
The cost of getting back home from Massachusetts weighed on Ben Orsulak of Glendale when he opted to turn down a scholarship to Harvard University. The scholarship paid for everything but room and board.

His mother had saved for his college costs since before he was born, but Orsulak, 18, has two younger siblings and both want to attend college.

Orsulak's choices were to go to the prestigious school and not get home for the holidays or go to school closer to home.

"I don't think I would really enjoy college as much if I was completely cut off from my family," Orsulak said.

It would have been a different decision a few years ago, he said, when it was still possible to grab a round-trip, cross-country ticket for $200. Orsulak opted to attend Northern Arizona University.
Does trading a Harvard education (and the doors such an education opens) for a Northern Arizona education make sense? The cost of a roundtrip plane ticket from Massachusetts to Phoenix is currently around $300. Thus, the student made the decision to go to Northern Arizona because of $100 per ticket. Let's assume the $300 is a low price and that the cross-country ticket would cost closer to $500. If the student wanted to come home home at the end of every semester (Christmas and Summer), the student would spend $600 more in travel costs each year than he would have with the $200 cross-country ticket.

This doesn't sound like a good trade to me. A Harvard education is worth so much more than a Northern Arizona education that it would seem that a much greater increase in travel costs would be necessary for travel costs alone to be the reason to not go to Boston.

Granted the other two siblings might change some of the calculus, but turning down a Harvard education because of a few thousand dollars in travel costs?

De gustibus non est disputandum.

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