Chapter One: Introduction

BACKGROUND OF THE STUDY

Education is one of the fundamental components of human capital that used to enhance the
quality of human life and ensuring social and economic progress of one’s country. According to
Todaro and Smith (2011), education can be seen as both an objective and component of
development, as well as “fundamental to the broader notion of expanded human capabilities
that lie at the heart of the meaning of development”. This suggestion implies that critical
investigation on educational situations and effective educational policies are crucial for the
development of a society. Among this situation that need critical investigation, evaluating the
performance of Education at its different level is the important one.

However, this paper will give due emphasize specifically on the evaluation of performance of
higher education. UNESCO considers higher education as a term that comprises all post-secondary
education, training and research guidance at education institutions such as universities that are
authorized as institutions of higher education by state authorities.

As college students are one major components of higher education, evaluation of performance
of higher education can be done through investigating to factors that determines college
performance of students in higher education.

Measuring of academic performance of students is challenging since student performance is

product of socio-economic, psychological and environmental factors. School environment,
Individual and family back ground, parents' income and educational level, Students working
(studying) hour, student's income are some factors that have direct or indirect impact on the
performance of students. In accordance with all factors affecting student's performance, the
researcher would like to give the highest emphasis to student's income level and its
contribution to their college performance.
In analyzing analysis of educational one on performance efficiency of education a combined
factors like school environment, individual and family back ground, Social classes, parental
income and educational level, student's ability and initial level of learning and a variety of pear
group pressure can be considered as inputs of education and grade point averages (GPA) as out
put of education. [Atkinson. Hodder and Stoughton; 1983:124]. In doing so we can measure the
degree of success of students in achieving objectives (scoring good GPA which is out put of
higher Education) there by student's college performance which is influenced by some factors-
inputs of education. Because efficient use of inputs will give competitive out which is GPA in
this case and then lead to good performance.

1.2 STATEMENT OF THE PROBLEM

Education plays a key role in the ability of a developing country to absorb modern technology
and to develop the capacity for self-sustaining growth and development. According to Todaro
(2003), it is the only means of securing modern-sector employment. Ethiopia as a developing
nation faces money challenges on her development programs that are designed to tackle the
problems on some economic and social situations like unemployment, poverty, Inequality in
income distribution, education and etc. The education sector as one of the component of
economic development it also faces challenges to contribute what it has to contribute.

When we come to higher education in Ethiopia, it has been constrained by so many difficulties
for too long. According to mekedes (2001) shortage of class rooms, inadequate facilities, low
quality provision of education are some difficulties that constrained higher education in Ethiopia.
Many facts reveal that in order to contribute its best to the country's development level higher
education should have good quality of education or appropriate standard of education. Having
this all facts in mind critical investigation on the performance and out comes of higher education
is unquestionable.

Education is a means of securing modern-sector employment and graduates of higher education

are considered as one of the outcomes of education. And hence modern-sector is secured by
graduates of higher education This implies that quality and performance of graduates to the
sector they employed and then to the economy. Graduates of such institutions are supposed to
influence the overall economic wellbeing through the decision they make in their own
profession. Having this fact in mined it is important to investigate factors affecting performance
of student's in higher education. The outcomes of there decision on the overall economic
wellbeing will depend on the quality of the decision they made which is the relation of student's
performance in colleges. Survey made in Addis Ababa University's library specifically in FBE
library and education libraries indicated that this critical issue is left un examined and the few
attempts are limited there scope. They only tried to investigate situations like male-female
performance differentials, problems and trends of student's enrolment in higher education and
etc. This paper basically needs to fill this gap through examining specific factors affecting
student's performance in colleges. Facts from macro and micro economic theories like consumer
choice behaviour and utility maximization and individuals investment decisions in the money
market suggests that income is an important economic factor that influence behaviour of
individuals in many aspects. So the effects of income on student's performance will be the
underlying interest in conducting this study.

The other important thing which was concluded from the survey is that, all papers conducted on
the issue suffer from there methodological defects in analyzing the data they gathered. While
conducting the research, all papers and findings in the Libraries lacks use of econometric the
techniques which is the most important instrument lo analyze data for economists. Econometrics
is based up on the development of statistical methods for estimating relation ship, testing
economic theories and evaluating and implementing government and business policy.
Econometric methods are relevant in virtually every branch of applied economics. [Jeffrely M.
wooldrige; 10:1]. According to wooldrige through use of empirical analysis which uses data to
test a theory or to estimate a relationship, econometric methods can be used to infer that one
variable has a casual effect on the other When research works are lacking econometric
techniques faille to have a consolidated explanation for the casual effect of one variable to the
other which leads to mistaken conclusion and policy recommendation. Therefore this paper tries
to improve these methodological defects and tries to reach on abetter conclusion and to give
appropriate recommendation by utilizing econometric techniques in analyzing the relationship
between college GPA and the influencing factors making income of student's interest of
variables.

1.3 OBJECTIVE OF THE STUDY

1.3.1 GENERAL OBJECTIVE

The general objective of this study is to assess the impact of some major factors on students
college performance. After identifying the impact of these factors on college performance, the
study also tries to formulate mechanisms through which performance of students enhanced.

1.3.1 SPECIFIC OBJECTIVES OF THE STUDY

The specific objective of the study will be as follows

A. identifying the effect of each variables on CGPA (cumulative grade point average) by
taking the case of students in AAU
B. Examining particularly the effect of student's income level on there CGPA holding the
influence of other factors constant which can be made possible through the use of
econometric techniques.
C. To give conclusion and some possible suggestions relating to the case at hand.

1.4 THE WORKING HYPOTHESISS

The study is based on the following two hypotheses.

A. Student's CGPA positively affected by there income level so that as there income level
increases there CGPA improves.
B. Student's income level in turn based on family's income level is high with that of low
family's education levels it contributes positively to student's income level.

1.5 SIGNIFICANCE OF THE STUDY

As tried to explain in the above sections graduates of universities have get enough power to
influence the wellbeing of overall economic situation through the decision they made in
there profession, Students who were performing well in school will graduate with expected
quality which able them to make decisions that can bring desired outcome. So that there
should be a strong need to investigate problems posed on college performance of students.
The result which will be obtained after analyzing set of data using econometric methods can
provide possible actions that should be taken by different parties in the colleges.

Beside to this, the existing findings are old aged with there methodological defects and this
is another fact adding to the significance of the study.

1.6 SCOPE LIMITATION OF THE STUDY

In the study quality of information heavily depends on the willingness of the respondent to
co operate. The respondent may interpret a question differently from what was intended to
and he/she may deliberately give false information. In addition respondent are reluctant to
provide information on personal matters like family back ground, his/her income level,
his/her CGPA and the likes. To tackle these problems at the beginning of the questionnaires
there will be introduction which ensures confidentiality and which encourage respondent's to
give accurate reply. The study also based on students in few specific faculties which able the
researcher to give a short notice about the purpose of the study before distributing the
questionnaires each time the survey is made. The researcher also tries to explain some
questions that seem to be misleading. Therefore the problem of respondent giving none or
false information is tackled from this angle. The other thing to note is that the result of the
study will not lead to a generalized conclusion since it is a specific case study. This paper
therefore does not try to come up with conclusive result.

Some problems will also arise with use of econometric techniques as instrument to analyze
the data collected in conducting the study. The notion of citreous paribus which means
"other (relevant) factors being equal" plays an important role in causal analysis. If we
succeed in holding all other relevant factors fixed and then find link between variables of
interest, we can conclude that one variable has a casual effect on another. However, except
in very special cases it will not be possible to literally hold all else equal. This problem can
be solved by using different econometrics approach and by making different realistic
economic assumptions sampling the complication.

1.7 DATA SOURCE AND METHODOLOGY

1.7.1 SOURCE OF DATA

In this st6udy a cross sectional data will be used. According to Wooldridge a cross sectional
data set consists of sample of individuals at a given Pointe in time. As the study entirely
depends on data’s obtained from sample of individual's use of this data set is appropriate
using random sampling technique samples will be drawn from faculties of business and
economics (FBE) and from few selected faculties in the Maine campus of AAU. The data
collection considers all AAU's students who have complicated one semester and above. This
will be done to capture the desired variation of variables under question.

The researcher planned to use questionnaires as a tool, to collector information on the

variables of the study most of the time a closed question format is used to reduce the
difficulty in coding and analyzing and to assure mutual exclusiveness.

1.7.2 METHOD OF ANALYSIS

In analyzing organizing and interpreting the data; tables Graphs different tactical techniques
(mean valance. Correlation) and econometric models will be the important instruments. But
econometric model should be the major instrument in analyzing data to hit the central goal
of this study and the model specification will be as follows. The first step in an empirical
analysis is specifying economic model which consists of mathematical equation that
describes various relation ship and the following is to represent the economic model

A) CGPA = f(pcmon, satres, prob, age, punc, female)

B) CGPA= B. +B1 pcmon +B2 satres + Bß3 prob +B4 age +B5 punc +B6 female +B7U

Where:
CGPA= cumulative grade point average

Pcmon = students' monthly pocket money

Satres = students' Scholastic Aptitude test scores

Prob = problems faced by students Age = students' age

Punc = punctuality of students in attending classes

Female = dummy variable accounting for female students

U = the error term

Ordinary Least Square (OLS) method for cross sectional data is used for estimating the
above model.

1.8 ORGANIZATION OF THE PAPER

This paper contains for chapters. Chapter one is introduction of the paper chapter two will be
literature survey and data presentation, regression and interpretation will be included in
chapter three. Chapter four will be conclusion and recommendation.
). It also unlocks the mind, enlarges it, and improves our lives in so many ways. Justin
Chastain (2021

education plays a key role in the ability of a developing country to absorb modern technology and
to develop the capacity for self-sustaining growth and development. education plays a key role
in the ability of a developing country to absorb modern technology and to develop
the capacity for self-sustaining growth and development. Todaro