Curriculum choice at A-level: why is Business Studies more popular than Economics?

This paper uses ALIS data to model student choice between two subjects often perceived as close substitutes for one another at A-level in the UK. We are interested in exploring the reasons why enrolments in Economics have witnessed a dramatic decline in the 1990s (just over 50%). We are particularly concerned with identifying the factors that may influence an individual's choice between these A-level subjects. We model this choice using an underlying latent variable approach. In the first stage of our analysis we use an ordered probit performance equation to model educational outcome for each sub-set of students. Our performance equations, confirm some established findings in the education literature. We find evidence of the importance of prior achievement and gender in examination success. A counterfactual exercise suggests that the grade differential between these two subjects is just under three-quarters of a UCAS point. In particular, of the students that took Economics 59% secured a grade C or above. We find that if the full sample took Economics only 45% would have gained a grade C or above. A similar exercise was carried out using the Business Studies sample of students and we find that if the full sample took Business Studies 57% would have gained a grade C or above, compared to 55% that were actually allocated these grades. On the basis of these results we calculate an overall average grade differential, between these subjects, of 0.7 of a UCAS point. This gives us a measure of the comparative difficulty between these two curriculum choices. In the second stage of our analysis we estimate a binomial probit, to model the choice of Business Studies over Economics. Our results suggest that a unit increase in the grade differential increases the probability of selecting Business Studies over Economics by approximately 16 percentage points. We find evidence that females are less likely to choose Economics over Business Studies, and the more able students, in terms of their GCSE score and mathematical ability, are more likely to select Economics over Business Studies. We find little evidence of parental background characteristics exerting significant effects on the choice between these two subjects at A-level, but do find evidence of ethnic background being significant.