Making the grade

February 01, 2019 Political economics

Arriving at TSE in September, Olivier says he is very happy to be here. “During the interviews when my friends asked me what my dream position would be, I answered TSE: it’s a great place to work and a very strong economics departmentStaying in Europe was also a nice plus.” His area of expertise includes applied microeconomics and empirical industrial organization, and he has carried out research on solar panel adoption and educational choices. 

Solar panels 

Using a dataset spanning from 2006 to 2012, Olivier has been able to look at the way households value the benefits of the adoption of solar panels. “In joint work with Frank Verboven, I analyze whether the policy of subsidies in Flanders (Belgium) has been good and whether there was a less expensive way to achieve the same results. We show that subsidizing investment benefits, rather than upfront investment costs, has proven to be quite expensive, mostly because consumers seem to undervalue the benefits of installing a solar panel.” 

Although the policy has been successful (in 2012, 8.5% of households in Flanders had installed a solar panel), the authors conclude that reducing the cost of installation would have even better results as this is the cost that is most overvalued by consumers. 

Consumers undervalue the benefits relative to the costs of adoption. A reason could be that people think that they might move in the near future, which could lower the return on their investment, or they don’t entirely trust the government to continue subsidies in the future. We’re not sure which reason plays a greater role, but we’re confident that decreasing the cost of adoption would be more effective than subsidising over a long period of time.” 

Educational choices

Olivier has also studied the education preferences of students in Flanders. Using a dataset tracking Flemish students over a long period of time, he was able to determine whether their choices had positive or negative impact on their careers. “In the Belgian education system, students have to choose education tracks starting at age 12. They can then change every year, but almost only from more academic to less academic tracks. At the end of each year, teachers hand out a certificate with an A, B or C grade which indicates whether the student should pursue the current track or change for a less academic careerStudents with the lowest score, a C, have to repeat the grade. Students with an A usually stay on their path but students with a B have to choose between switching track or repeating the grade.” 

Analysing the impact of these grades, Olivier suggests that B-grade students ought not to repeat a class. “It’s better for students to change tracks following a B grade than to repeat a year because our data indicate that forcing them to change tracks does not decrease higher education graduation, while repeating does and it takes one more year for these students to get their degree.” 

A new policy, currently being discussed by the government, plans to make repeating impossible for B-grade students, directly applying the results of Olivier’s research. “They’re going to abolish the option of repeating grades, which is a good answer to the issues I noticed in my work.”

Future work

Olivier has also started to work on several other research projects. “In joint work with Koen Declercq, I am currently working on a dataset of 100,000 students from a wide range of schools. I’m trying to see if going to a more academic, ‘elite’, school gives students more chances to get a high school degree.” 

The results have been surprising. “The first results indicate that students from these schools are more likely to graduate from high school, but once you take selection into account, we notice the opposite effect. This could be because students at these schools who aren’t very good at academic tracks have to completely change schools to get a more suitable track, and they’re less likely to do so than students enrolled in more general schools.”

Olivier would also like to study childcare choices and allocation systems to improve the matching of children to childcare options. “Right now in Belgium, as in many other countries, applying for a childcare solution is the first thing parents have to do once they know they’re expecting.” 

Extrait du TSE Mag#18 Winter 2018