Students may veer toward higher-earning majors after viewing real-world salary data, according to a study published in the Journal of Human Capital.
Study authors Matthew Wiswall, a professor of economics at Arizona State University, and Basit Zafar of the Federal Reserve Bank of New York, interviewed a group of New York University students to determine their knowledge about real-world earnings.
About 500 students were asked to estimate marketplace earnings and what they expected to earn at age 30.
The study found that students started with little knowledge of financial returns on education. For example, students underestimated how much an average male with no college degree would earn by nearly $10,000 annually and overestimated what an average male with an economics degree would earn by nearly $35,000 annually.
After completing their estimates, researchers then gave participants real-world data and asked them to reconsider how much they would earn at 30 years old.
Students changed their views on future earnings after viewing the real-world salary information, with business/economics students revising their estimates downward by an average of 8.5%, or $28,540.
Slightly more than 12% of students also decided to change their intended major after viewing the data.
The authors concluded, "Students respond to information about the population distribution of earnings by revising their beliefs as well as expected future choices." They noted, "[T]he large errors in population beliefs in our sample ... sugges[t] a role for information campaigns focused on providing accurate information on returns to schooling."
Not all about the money
Some educators are uncomfortable with so much emphasis being put on financial returns.
"More information is always better than less, but I am not a fan of the 'vocationalization' of undergraduate education," says Bob Bruner, a professor of finance at the University of Virginia's Darden School of Business.
According to Wiswall, "Having students graduate well-rounded with a variety of experiences would be the ideal," but "it is probably in everyone's best interest that students make these choices with as much information as possible."
He also notes that STEM fields are still not wildly popular, suggesting that students aren't only driven by earnings (Constable, Wall Street Journal, 3/27).
Help students choose best-fit majors
To truly scale and maximize the impact of persistence and engagement initiatives, you need to empower students with the information that will help keep them on a path toward graduation—such as the right major. Instead of relying on resource-strapped advisors and digital tools that are inert and passive, institutions need a breakthrough solution with a progressive student-centric approach. Learn how Guide, our student-facing mobile app, supports and amplifies students’ academic progress, campus engagement, and career preparedness.
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