An undergraduate’s choice of college major has enormous consequences for their economic future, but how well do they understand their potential earnings when deciding? While previous research has shown that students know surprisingly little about the earnings of people with different college majors, we lack understanding about whether this lack of information distorts their actual choices. John Conlon presents new work on students’ beliefs about future earnings, and how providing them with future salary information influences their choices.
Conlon surveyed incoming freshman at the Ohio State University to elicit students’ beliefs about the average salary of workers who graduated with degrees in various fields. He found that most students were not able to estimate future salaries associated with different majors. Sixty-two percent of the students misestimated their top-ranked field by more than 20 percent of the true average salary. In addition, respondents significantly underestimated salaries for every field. For seven of the ten fields, the average belief was more than $10,000 below the true average salary.
In a randomized experiment, half of the students were then shown the correct answers to these questions. The result? Providing students with simple information about average salaries has a large impact on their choice of college major more than three years later. When given salary information, the students were more likely to major in one of the fields, and they also took more classes in these fields, with significant effects appearing as early as the semester immediately following the experiment.
According to Conlon, the take-home message is clear, “These findings underscore the importance of student beliefs and point toward the potential benefits of policies to help undergraduates make informed choices.”
Read the full study in the Journal of Human Resources: “Major Malfunction: A Field Experiment Correcting Undergraduates’ Beliefs about Salaries,” by John Conlon.
John J Conlon is a Ph.D. student in Business Economics at Harvard University (@JohnConlon7).