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Abstract

The choice of a college major plays a critical role in determining the future earnings of college graduates. Students make their college major decisions in part due to the future earnings streams associated with the different majors. We survey students about what their expected earnings would be both in the major they have chosen and in counterfactual majors. We also elicit students' subjective assessments of their abilities in chosen and counterfactual majors. We estimate a model of college major choice that incorporates these subjective expectations and assessments. We show that both expected earnings and students' abilities in the different majors are important determinants of student's choice of a college major. We also show that students' forecast errors with respect to expected earnings in different majors is potentially important, with our estimates suggesting that 7.5% of students would switch majors if they made no forecast errors.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4738.

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Length: 32 pages
Date of creation: Feb 2010
Date of revision:
Publication status: published in: Journal of Econometrics, 2012, 166 (1), 3-16
Handle: RePEc:iza:izadps:dp4738

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Phone: +49 228 3894 223
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Web page: http://www.iza.org

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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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Related research

Keywords: subjective expectations; choice of college major;

Other versions of this item:

Find related papers by JEL classification:

• I2 - Health, Education, and Welfare - - Education
• C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data

This paper has been announced in the following NEP Reports:

• NEP-ALL-2010-02-20 (All new papers)
• NEP-EDU-2010-02-20 (Education)
• NEP-LAB-2010-02-20 (Labour Economics)

References

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Cited by:

1. Joshua Congdon-Hohman & Anil Nathan & Justin Svec, 2013. "Student Uncertainty and Major Choice," Working Papers 1301, College of the Holy Cross, Department of Economics.
2. Jürg Schweri & Stefan C. Wolter & Joop Hartog, 2008. "Do Students Expect Compensation for Wage Risk?," Economics of Education Working Paper Series 0011, University of Zurich, Institute for Strategy and Business Economics (ISU).
   
   • Schweri, Juerg & Hartog, Joop & Wolter, Stefan C., 2011. "Do students expect compensation for wage risk?," Economics of Education Review, Elsevier, vol. 30(2), pages 215-227, April.
   • Schweri, Jürg & Hartog, Joop & Wolter, Stefan C., 2009. "Do Students Expect Compensation for Wage Risk?," IZA Discussion Papers 4069, Institute for the Study of Labor (IZA).
3. Todd R. Stinebrickner & Ralph Stinebrickner, 2011. "Math or Science? Using Longitudinal Expectations Data to Examine the Process of Choosing a College Major," NBER Working Papers 16869, National Bureau of Economic Research, Inc.
   
   • Todd Stinebrickner & Ralph Stinebrickner, 2011. "Math or Science? Using Longitudinal Expectations Data to Examine the Process of Choosing a College Major," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20111, University of Western Ontario, CIBC Centre for Human Capital and Productivity.

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