How do college students respond to public information about earnings?

Matthew Wiswall, Basit Zafar

Research output: Contribution to journalArticle

33 Scopus citations

Abstract

Expectations are important determinants of decisionsmade under uncertainty, and if individuals’ expectations are biased, they can make suboptimal choices. This paper uses a unique “information” experiment in which we provide college students true information about the population distribution of earnings. We find that college students are substantially misinformed about population earnings and revise their earnings beliefs in a sensible way in response to the information. The specificity and informativeness of the signal matters for updating. There is, however, substantial heterogeneity in students’ updating heuristics. We also find that students revise their intended major in response to the information.

Original languageEnglish (US)
Pages (from-to)117-169
Number of pages53
JournalJournal of Human Capital
Volume9
Issue number2
DOIs
StatePublished - Jun 1 2015

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ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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