Watson Institute for International and Public Affairs

Using big-data to drive smart policy in Chile: Economist Justine Hastings co-authors working papers

June 29, 2015

Economist Justine Hastings and co-authors partnered with the Chilean Federal Government to improve federal student loans in light of student protests over rising debt and rising default rates. The research agenda and resulting working papers are an example of big-data and research driving smart policy decisions. The research team assisted the government in collecting administrative data and extensive survey data, to understand how students make education investment decisions and to  measure which colleges and degrees add value to students in the labor market. Armed with hard data from tax records on earnings returns to colleges, and with surveys indicating low-income students make poorly-informed enrollment decisions with their loan dollars, the government tested an expected-earnings-gains disclosure policy in the loan system, and measured if telling students about potential returns changed their enrollment choices. The government was then able to design a new loan policy that tied student loans to the earnings value a student could expect to gain post-enrollment. Together, researchers and policy makers used big data and cutting edge research to determine what works for student loan policy, and act on it.