Modeling College Major Choices Using Elicited Measures of Expectations and Counterfactuals

32 Pages Posted: 8 Feb 2010

See all articles by Peter Arcidiacono

Peter Arcidiacono

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

V. Joseph Hotz

Duke University; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Songman Kang

Duke University - Trinity College of Arts & Sciences

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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.

Keywords: choice of college major, subjective expectations

JEL Classification: I2, C81

Suggested Citation

Arcidiacono, Peter and Hotz, V. Joseph and Kang, Songman, Modeling College Major Choices Using Elicited Measures of Expectations and Counterfactuals. IZA Discussion Paper No. 4738, Available at SSRN: https://ssrn.com/abstract=1549214

Peter Arcidiacono (Contact Author)

Duke University - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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V. Joseph Hotz

Duke University ( email )

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Durham, NC 27708
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HOME PAGE: http://www.econ.duke.edu/~vjh3

National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics ( email )

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Songman Kang

Duke University - Trinity College of Arts & Sciences ( email )

Durham, NC 27708-0204
United States

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