“If only I knew then what I know now,” is a common lament among some workers about their (perhaps suboptimal) choices at college. It relies on the rather dodgy idea that you could somehow have the insights of a 35-year-old when you’re only 19. But what if you could?
“If only I knew then what I know now,” is a common lament among some workers about their (perhaps suboptimal) choices at college.
It relies on the rather dodgy idea that you could somehow have the insights of a 35-year-old when you’re only 19.
But what if you could? That is, what if while you were young, you were exposed to real data that called into question some of your beliefs? A couple of researchers tried it with a group of New York University students who had misinformed views about wages in various fields.
By providing real, public data about pay, “our intervention nudged students toward higher-earning majors,” the researchers said in the study, “How Do College Students Respond to Public Information About Earnings,” published in the Journal of Human Capital last year. The finding could have important implications as debate grows about whether some college degrees are worth the cost.
Rethinking their choices
The study’s authors— Matthew Wiswall, professor of economics at Arizona State University, and Basit Zafar at the Federal Reserve Bank of New York—first had to establish that the students in the study did indeed lack accurate information about potential future earnings.
They started by asking the students two questions: What are the real marketplace earnings in the outside world? And what do they expect to earn at 30 years old? The students were then given real-world data and asked to answer the second question again.
The students’ knowledge of real-world wage data was limited. For example, they underestimated how much an average male with no college degree would earn by almost $10,000 a year and overestimated what an average male with an economics degree would earn by almost $35,000 a year, the researchers said.
After the students had seen the real-world salary information they were asked again to estimate what they would earn in the future. The subjects changed their views. The business/economics students, for example, revised the estimate of their own expected future earnings downward by an average of $28,540 (8.5%).
In addition, 61 students out of the 495 students studied, or just over 12%, decided to change their intended major after seeing the data.
“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.”
Still, the idea that money should weigh so heavily into decisions about education has some educators uneasy.
“More information is always better than less,” says Bob Bruner, a finance professor at the University of Virginia’s Darden School of Business. “But I am not a fan of the ‘vocationalization’ of undergraduate education.”
He sees the phenomenon as “almost a gravitational pull” for undergraduates to focus on jobs and not education.
Dr. Wiswall sees it differently. “Certainly having students graduate well-rounded with a variety of experiences would be the ideal,” he says. Still “it is probably in everyone’s best interest that students make these choices with as much information as possible,” he adds, pointing to rising college tuition costs.
He also says that the lack of students opting to pursue science, technology, medicine and engineering degrees, despite the prospect of higher pay and steady work, provides some evidence that students aren’t “overly” driven by dollars.
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