Modeling College Major Choices using Elicited Measures of Expectations and Counterfactuals
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.
A preliminary version of this paper was presented at the Conference on "Identification and Decision" at Northwestern University. We wish to thank Charles Manski for useful comments on this research. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- Students' forecasts of expected earnings in different majors are often incorrect ... 7.5 percent of students would switch majors if...
Arcidiacono, Peter & Hotz, V. Joseph & Kang, Songman, 2012. "Modeling college major choices using elicited measures of expectations and counterfactuals," Journal of Econometrics, Elsevier, vol. 166(1), pages 3-16. citation courtesy of