Determinants of College Major Choice: Identification Using an Information Experiment

60 Pages Posted: 7 Jul 2011

See all articles by Matthew Wiswall

Matthew Wiswall

University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER)

Basit Zafar

Arizona State University

Multiple version iconThere are 3 versions of this paper

Date Written: June 1, 2011

Abstract

This paper studies the determinants of college major choice using a unique “information” experiment embedded in a survey. We first ask respondents their self-beliefs - beliefs about their own expected earnings and other major-specific outcomes conditional on various majors, their population beliefs - beliefs about the population distribution of these characteristics, as well as their subjective beliefs that they will graduate with each major. After eliciting these baseline beliefs, we provide students with information on the true population distribution of these characteristics, and observe how this new information causes respondents to update their beliefs. Our experimental design creates unique panel data. We first show that respondents make substantial errors in population beliefs, and logically revise their self-beliefs in response to the information. Subjective beliefs about future major choice are positively and strongly associated with beliefs about self-earnings, ability, and spouse’s earnings. However, cross-sectional estimates are severely biased upward because of the positive correlation of tastes with earnings and ability. The experimental variation in beliefs allows us to identify a rich model of college major choice, with which we estimate the relative importance of earnings and earnings uncertainty on the choice of college major versus other factors, such as ability to complete coursework, spouse’s characteristics, and tastes for majors. While earnings are a significant determinant of major choice, tastes are the dominant factor in the choice of field of study. We also investigate why males and females choose different college majors.

Keywords: college major, information, uncertainty, risk, subjective expectations, marriage market returns

JEL Classification: D81, D84, I21, I23, J10

Suggested Citation

Wiswall, Matthew and Zafar, Basit, Determinants of College Major Choice: Identification Using an Information Experiment (June 1, 2011). FRB of New York Staff Report No. 500, Available at SSRN: https://ssrn.com/abstract=1879989 or http://dx.doi.org/10.2139/ssrn.1879989

Matthew Wiswall

University of Wisconsin - Madison - Department of Economics ( email )

William H. Sewell Social Science Building
1180 Observatory Drive
Madison, WI 53706-1393
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Basit Zafar (Contact Author)

Arizona State University ( email )

WP Carey School of Business, ASU
Tempe, AZ 85287
United States
9179326564 (Phone)

HOME PAGE: http://https://sites.google.com/site/basitakzafar/

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