Do college students pick majors based on potential earnings?

W. P. Carey Associate Professor of Finance Matthew Wiswall and Basit Zafar at the Federal Reserve Bank of New York conducted a study showing that college students lack accurate information about future earnings — information that lead some students to change their majors.

The Wall Street Journal reports that college students have limited knowledge of the wages they can expect in various fields, often over-estimating what they will be earning in the future, according to a study by W. P. Carey Associate Professor of Finance Matthew Wiswall.

From The Wall Street Journal, March 27, 2016:

“Students respond to information by revising their beliefs, as well as expected future choices,” the authors concluded, adding that the cost of distributing such data is low and can play a “critical role” in helping students decide what and where to study.

Dr. Wiswall says providing information about pay differentials by major could make more of an impact on students than highlighting the differences in graduation rates and average starting salaries among students at various schools. “The gaps in earnings between majors are even larger.”

About Associate Professor Matthew Wiswall