Chapter One

Introduction

1.1. 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,
Todaro (2003This 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 needs to emphasize specifically on the evaluation of performance of
higher education. UNESCO considers higher education as a term used to mean regular
enrolment of students in colleges and universities (Mekedes; 2001:7).

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.

Performance of students can be in influenced by economic, social and cultural factors [LUL;
1998:1]. School environment, Individual and family back ground, parents' income and
educational level, student's ability, Students working (studying) hour, student's income and
sex 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 there college
performance.

However, when one focuses analysis of educational one on performance, it is difficult to

know what the criteria of judging it [LUI; 1998:1]. Analyzing the link between productivities
and efficiency with that of performance will provide answer to the above basic question.
Productivity denotes the trend of productiveness of the factors of production or a relationship
between out put and input over a period efficiency has a number of facets: the rate at which
inputs generate out put, the utilization of inputs to produce output and the potential output
which may be obtained from a specific inputs [David Bailey and Tony Hubert; 1980:101].

In analyzing 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