Editorial: Research study sheds light on financial risk

It turns out that the process of financing your education might correlate to your risk-taking behaviors, such as binge drinking and smoking marijuana. It turns out that the process of financing your education might correlate to your risk-taking behaviors, such as binge drinking and smoking marijuana.

Researchers from the School of Family Life at Brigham Young University lumped college students into three categories: those who received minimal financial support from their parents, those who received almost full support, and those who worked together with their parents to split costs in some way.

Unsurprisingly, they found that the college students who were least likely to engage in risky behavior were those who primarily financed their education. These students were also more likely to identify with the ultimate goal of their degrees: their future, employed selves. The study involved 402 undergraduate students, recruited from four universities across the United States, along with one of their parents.

This study brings to light evidence of what we think is an intuitive phenomenon. After all, students financially supporting their educations could have less time to engage in risky behavior. Although correlation is not causation — and these students are not acting in a vacuum, but rather dealing with different upbringings, values and mindsets — we think it’s worth while to examine these findings.

First of all, why is this the case?

We can use the financial crisis as a sort of metaphor for how students behave with money. For instance, moral hazard is in play when someone uses another person’s money. New York Times economy columnist Paul Krugman defines it as, “any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly.” These risks, including drinking, binge drinking, marijuana use and smoking, all have the chance to effect negative consequences.

And then you have the bailout. If goofing off during college goes awry and leads to an extra year or two of tuition, for example, parents can provide a sort of security net for their children. This can get slippery — it could even be considered risky lending — and the students whose parents bear the brunt of their behavior might not feel the true effects of their actions.

In effect, this study further demonstrates the way the realm of risk and money works.

Secondly, some might ask, should parents alter the way they finance their children’s education?

We think there are far too many factors at play to alter one variable and expect a result. There is no guarantee that, if you take away financial support, risky behavior will stop. Perhaps giving students a bit of responsibility will help them make healthier decisions; perhaps it won’t.

Alternatively, we think that the way students behave on their own in college is highly reflective of what they’ve learned before college. Instead of slashing financial support, parents should work to imbue the kind of work ethic in their children they want to see long before college is even an issue.

Finally, what does this mean for us students?

Just because you’re in one camp or the other doesn’t mean you have to subscribe to statistics. Of course, we all have friends who support and negate these research findings.

The important thing to take from this is that the value of an education can be hindered by irresponsibility. And whether your parents, yourself or a joint effort is paying for your time at Pitt, there is a price tag for your time here.

Make it worth it.