Can’t Hear Bad News

I’ve long been puzzled with why students aren’t taught more about the consequences of choosing different careers, and why they don’t take more initiative to learn this for themselves. One clue: apparently students are only capable of hearing good news about future earnings. Maybe students don’t want to hear, and aren’t told, out of an urge to avoid hearing bad news? Details:

[Of] undergraduate college students … we ask … (1) their self beliefs about their own expected earnings if they were to major in different fields and (2) their beliefs about the population distribution of earnings. After the initial round in which the baseline beliefs are elicited, we provide students with accurate information on the population characteristics and then re-elicit their self beliefs. …

Students in our sample, despite belonging to a very high ability group, have biased beliefs about the population distribution of earnings. … More experienced students – those in their second or third year – hav[e] relatively more accurate beliefs about population earnings. …

The effect of information is asymmetric: There is signifcant updating when the information is good news for the respondent, i.e., when the respondent is informed that population earnings are higher than her prior beliefs, and no significant updating in instances where the respondent is informed that the population earnings are lower than her prior beliefs. … Relative to freshmen, experienced students are more likely to be non-updaters and less likely to react excessively to information. …

The information on earnings we provide causes nearly half of the students to revise their beliefs about graduating with the different majors. (more)

GD Star Rating
Tagged as: ,
Trackback URL:
  • Students don’t find out about the value of their degrees before they graduate because it’s in no one’s interest to tell them. Universities want to fill all the courses they offer, so why would they tell students that certain degrees are a dead end? More generally, members of the dominant class — some of whom are high-level university administrators, while others work in the media or in government — tend to have the more valuable sorts of degrees. All these people could, if they wished, take steps to ensure that students are well-informed about the value of different degrees. But it’s not in their interest to do so, either, because it would mean that their children would face more competition to obtain the most valuable degrees. In other words, consumer ignorance benefits those who are best informed, who are likely to be privileged to begin with.

    • If demand for a degree is inelastic, then it’s no skin off a school’s nose to offer a bazillion engineering and math courses and just a few philosophy courses, say. They can hire and offer the classes either way.

      Your follow-the-money argument only says colleges will want people to believe in college in general; it says nothing about colleges propagandizing about the current random proportions of classes and degrees.

      (Counter-point: I have heard that the degrees derided as impractical are much cheaper to offer than more economically valuable classes, and so they function as subsidies to those classes – the English major is heavily cross-subsidizing the chemical engineering major. However, I do not know if this is true at all, nor if the costs of offering particular classes line up just right to explain all this.)

      • Someone from the other side

        Except if professors have tenure and you thus cannot scale down the costs for the less valuable majors quickly (if at all)

  • Ely

    I don’t understand why more isn’t said for the idea that students just want to do something they like, and then try to justify it by believing that they will somehow be the exceptional student who bags a high-earning job with any particular degree. My advice to students is to throw caution to the wind. If you’re borrowing so much money to study something, it had better be what you want to study and not just what seems practical by the numbers. You can always retrain and perform a drudging, unhappy, commodity job later on if you truly have to, and usually at a fraction of the cost that your initial degree requires. But if you never even attempt to study what you want, you’ll just be unhappy from the start even if you’re reasonably well-paid.

    In my own case, I studied mathematics and engineering and worked as a software developer earning a very good salary for 2+ years before I realized that I was utterly miserable and that I should have studied philosophy and theoretical physics in college. Now I’m in graduate school studying those things. If I cannot get a job in those fields, oh well. At least I tried. Like Robin says all the time, life is long. It’s far too long to make a decision at age 18-22 to study something for its practical earning potential. Unless you have exceptional circumstances where you literally need relatively high income, I say it’s a bad move to choose a degree for the salary return on investment. You should think only about the happiness-brought-by-the-subject-material return on investment. After all, anyone can learn computer programming in < 2 years and get an IT job somewhere if they really work for it and need the money. But once you're older and working that IT job, it will be a lot harder to put together that 100 page senior thesis on Hume's induction problem if that's the sort of thing that makes you happy.

  • One problem is that the lucrative jobs change every decade or two. For example, the jobs most at risk in the recent recession were those that were thought to be least at risk a decade earlier. For example, the two most common worries were that your job would be outsourced to the Third World or that the financial people would take over and lay off everybody. In order to avoid those fates, some people decided to get jobs fixing up houses on the grounds that house repair could not possibly be sent offshore. Some of them graduated to buying houses, fixing them up, and flipping them. Others decided to join the financial industry on the grounds that they’d be doing the laying off instead of being laid off.

    A few years ago, it looked like you would be employable if you got a college education in anything. Right now, the people who majored in anythingology are protesting their unemployment.

  • > Looking across majors in column (1), we see that students expect the highest earnings ($100,000) if they major in economics/business, and lowest if they do not graduate ($37,500). Among the graduating majors, students expect the earnings to be lowest in humanities and arts ($64,100)…For example, in the economics and business category, the 5th percentile of the self belief distribution is $50,000, the 50th percentile is $90,000, and the 95th percentile is $175,000…While students believe that the likelihood of earning at least $35,000 is fairly similar across the graduating majors (at least 0.75), the subjective likelihood of earning at least $85,000 varies substantially across the majors, with students expecting the highest probability of that happening in the economics/business and engineering/computer science categories (mean probability exceeding 0.6 in both), and the lowest probability in humanities/arts (0.4) among the graduating majors…Looking across each of these columns, we see that population beliefs follow the same pattern as self beliefs (columns 1 and 2), with students believing population earnings to be highest in the economics/business and engineering/computer science categories, and lowest in humanities/arts and the not graduate categories. Compared to self earnings beliefs, students report similar population beliefs for all fields, except for economics/business and natural sciences, for which self beliefs are significantly higher…Mean absolute errors are significantly larger in economics/business and engineering/computer science relative to the excluded major category (humanities/arts). Here, we see that female and high ability respondents make significantly larger absolute errors. Estimates in columns (5) and (6) suggest that these are driven by larger negative errors (i.e., larger overpredictions) by these groups, on average. None of the other individual characteristics are significantly different from zero at levels of significance of 95% or higher.

    Oh the irony.

  • Ari T

    I don’t remember if it was here or somewhere else where I read that asking professionals about their work is a very cheap way to get a realistic view of the profession before getting a degree.

    I don’t think this is only restricted to student and future earnings. When I buy on Amazon, I tend to check the best and worst reviews first, and the distribution. When I was new to Amazon, I usually only checked the most recommended one which was the most positive. Same thing with IMDB. Although most IMDB reviews are just noise.

    I wouldn’t be surprised if customers generally don’t want to read bad news about some products. Like if you are buying a car, you want to feel good about it. You don’t want to read information about people dying in that car. This is kind of a product affiliation.

  • I’ve long been puzzled with why students aren’t taught more about the consequences of choosing different careers, and why they don’t take more initiative to learn this for themselves.

    I’m actually writing an essay on why to become a nurse instead of a doctor because, after dating a doctor who bitterly regrets never learning what being a doctor actually entails and how much nurses can make, I’ve realized that people should have some idea of the mistake they’re often making when they let their 21- or 22-year-old self make binding decisions that affect the self they’ll be more than a decade later.

  • Pingback: socialempirics()

  • Pingback: Entrepreneurship: a game of poker, not roulette | 80,000 Hours()

  • Pingback: Entrepreneurship is a game of Poker - The Asian Entrepreneur()