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How Do College Students Respond to Public Information about Earnings?

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  • Matthew Wiswall
  • Basit Zafar

Abstract

Expectations are important determinants of decisions made 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.

Suggested Citation

  • Matthew Wiswall & Basit Zafar, 2015. "How Do College Students Respond to Public Information about Earnings?," Journal of Human Capital, University of Chicago Press, vol. 9(2), pages 117-169.
    • Handle: RePEc:ucp:jhucap:doi:10.1086/681542
    DOI: 10.1086/681542
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