There are few questions as loaded as, “What are you majoring in?” Countless parents, even a president, have derided some major choices, most often for not being practical (translation: for leading to careers that don’t pay much). As any parent of teenagers knows, such derision can backfire — leading a student straight into an impractical major. But it begs the question: Why do students choose the majors they do?
“It may seem evident that students choose a major based on a range of factors, including but not limited to earning potential,” explains Associate Professor of Economics Matthew Wiswall. “But the question is somewhat understudied.”
How much does earning potential matter to a student’s choice of major? What if the student is misinformed about actual earning potential — could accurate information change the student’s mind? Those are questions that Wiswall and his coauthor, Basit Zafar at the Federal Reserve Bank of New York, answer in their recent paper, “Determinants of College Major Choice: Identification using an Information Experiment,” published in the Review of Economic Studies.
The effects of correcting misinformation
To answer their questions, Wiswall and Zafar set up an information experiment — a novel approach that would not just rely on observation to determine students’ preference but ask the students. The researchers recruited a group of first-year undergraduate students, sophomores, and juniors from New York University. The students were sent a survey with questions about their perceptions of earnings and ability relative to five major categories: business and economics, engineering and computer science, humanities and other social sciences, natural sciences and math, and never graduate/drop out.
First, the survey asked students how much they think a 30-year-old working full-time with a bachelor’s degree in each of the five majors earns. “We have real data on earnings by major,” Wiswall explains, “but students could be misinformed if they haven’t seen the data themselves.” In many cases, students over-estimated earnings, often by a lot. For example, students over-estimated full-time earnings for female graduates in economics and business by 31.1 percent and male graduates in the same majors by 16.6 percent.
Next, the survey asked students how much they think they would earn working full time at age 30 if they graduated with a bachelor’s degree in each of the five majors. A student’s answer to that question might be different than the first, Wiswall explains, if the student sees herself as particularly exceptional (and likely to earn more than average) or not so great (and liable to make less). Given the “high-ability sample” of students taking the survey, it was not surprising that students predicted their future earnings would be higher than average.
Students’ perceptions of their earning potential followed the same pattern as their thinking about how much people today earn in those different fields. Wiswall explains, “Students believe their earnings will be highest if they complete a major in the economics/business and engineering/computer science categories, and lowest if they do not graduate or graduate in a humanities and arts field.”
After recording their answers to the two baseline questions, students saw actual earnings data by specialization. Then they were asked again about their outlook for their earning potential. The researchers’ goal: to see if accurate earnings data would change students’ outlook about their earning potential in a given major. It did. Students revised their forecast for future earnings with economics or business degrees downward by 12.12 percent on average, and upward by 33.42 percent on average for no degree.
Not only did correcting students’ misinformation about earnings by specialization change their beliefs about their own earning potential, but it also changed many students’ minds about which major to choose. Two-thirds reported some likelihood that they would graduate with a different major than the one they identified at the beginning of the experiment. Some who had identified humanities/arts as a possible major at the outset switched to a higher-paying major. A “substantial” number said they were more likely than before to major in humanities or arts.
Earnings expectations and ability perceptions do play a significant role in students’ choice of major; what’s more, information that corrects incorrect beliefs influences students’ choices.
Peering into the black box of taste
The study also reveals the extent to which earnings expectations and ability perceptions influence students’ choice of major. It makes clear that while earnings expectations and ability perceptions both play a significant role in the selection of a major, they are not the only factors that matter — or even the most important factors. “Even with our rich data on beliefs across a variety of [monetary] and [non-monetary] aspects of majors, major choices in our results are still primarily the result of ‘taste.’”
Taste encompasses all the other factors that influence a students’ decision. It explains why even when students have accurate earnings information, some still choose lower-paying majors over higher-paying majors. These influential taste factors might include parents’ majors or other family influences, experiential influences before college, a student’s competitiveness or appetite for risk, or plans for life beyond career.
Wiswall is continuing to pursue those taste factors. He explains, “We’ve taken students back into the lab to get into that black box of taste. We’ve assessed gender differences in preferences for risk and competition, and whether that impacts major choice. We’ve looked into students’ expectations about children and marriage and how they affect a major choice.”
In the first study, Wiswall finds that confidence and competitiveness, but not the risk, do affect earnings expectations and explain “an important proportion” of the gender gap there. But those factors do not influence major choice, at least among the five broad specialization categories. The second study reveals that women, in particular, believe that science or business majors would raise their earnings but also lead to lower rates and delay of marriage and fertility. “But it is not clear,” Wiswall explains, “that there is misinformation that could be corrected in that case to change students’ decisions.”
Practical implications of the information experiment
Though it didn’t bust open the black box of college major decision-making entirely, the newfound understanding that earnings perception influences students’ major choices, and that students do benefit from the accurate information, has important practical implications. For one, it suggests that school administrators and others could provide that accurate earnings information for students to help them make better-informed choices.
“College major is a big decision, and an important one,” Wiswall says, “especially given the rising cost of higher education. In that environment, it’s hard to argue that providing misinformed people with accurate information isn’t a good thing.”