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Risk Aversion And Major Choice: Evidence From Italian Students

Author

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  • Maria De Paola

    ()

  • Francesca Gioia

    () (Dipartimento di Economia e Statistica, Università della Calabria)

Abstract

Does the choice of the field of study depend on individual risk aversion? The direction of the relationship between individual risk attitudes and type of college major chosen is potentially ambiguous. On the one hand, risk adverse individuals may prefer majors allowing high returns on the labour market; on the other hand, if these majors expose students to a higher probability of dropping out, those who are more risk adverse may be induced to choose less challenging fields. Using data from a sample of students enrolled in 2009 at a middle-sized Italian public University, we find that, controlling for a large number of individual characteristics, including cognitive abilities, personality traits and family background, more risk adverse students are more likely to choose any other field (Humanities, Engineering and Sciences) compared to Social Sciences. We interpret this result considering that some of these fields, such as Humanities, allow to reduce the risk of dropping out, while others (such as Engineering and Sciences)involve a lower risk on the labour market. It also emerges that the effect of risk aversion on major choice is related to student ability. Risk adverse students characterized by high abilities tend to prefer Engineering, while the propensity of risk adverse students to enrol in Humanities decreases when ability increases, suggesting that the attention paid to labour market risks and drop out risks varies according to student skills.

Suggested Citation

  • Maria De Paola & Francesca Gioia, 2011. "Risk Aversion And Major Choice: Evidence From Italian Students," Working Papers 201107, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
  • Handle: RePEc:clb:wpaper:201107
    as

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    File URL: http://www.ecostat.unical.it/RePEc/WorkingPapers/WP07_2011.pdf
    File Function: First version, 2011-07
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    References listed on IDEAS

    as
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    Cited by:

    1. Luc Bridet & Margaret Leighton, 2015. "The Major Decision: Labor Market Implications of the Timing of Specialization in College," Discussion Paper Series, Department of Economics 201510, Department of Economics, University of St. Andrews.
    2. Fouarge, Didier & Kriechel, Ben & Dohmen, Thomas, 2014. "Occupational sorting of school graduates: The role of economic preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 335-351.
    3. Lehouelleur, Sophie & Beblavý, Miroslav & Maselli,Ilaria, 2015. "How returns from tertiary education differ by field of study: Implications for policy-makers and students," CEPS Papers 10835, Centre for European Policy Studies.

    More about this item

    Keywords

    Risk aversion; College choice; Education;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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