This paper investigates the key determinants affecting household spending for university degree in Vietnam. This paper serves as empirical evidence for policymakers to select appropriate factors to estimate financial needs for university students in Vietnam.
We employ an innovative variable selection approach with adaptive LASSO for Tobit Regression Model.
The results suggest income, region and ethnicity play significant roles in determining higher education expenditure at Vietnamese households. Gender-related indicators (such as gender of household head, student’s gender), distance to school, occupations, etc. are empirically insignificant.
This study proposes a data-driven method by interfering regulation and Tobit regression to understand the divergence in higher education spending. Especially, adaptive LASSO was first introduced to identify key determinants of higher education expenditure at household level in Vietnam. It hopes to tackle over-fitting problems of traditional OLS regression in previous literature.
