Working Paper: NBER ID: w21300
Authors: Justine Hastings; Christopher A. Neilson; Seth D. Zimmerman
Abstract: We use a large-scale survey and field experiment to evaluate a policy that provided information about college- and major-specific earnings and cost outcomes to college applicants in Chile. The intervention was administered by the Chilean government and reached 30% of student loan applicants. We show that the low-income and low-achieving students who apply to low-earning college degree programs overestimate earnings for past graduates by over 100%, while beliefs for high-achieving students are correctly centered. Treatment causes low-income students to reduce their demand for low-return degrees by 4.6%, and increases the likelihood they remain in college for at least four years. To understand the mechanisms driving the effect of disclosure policies we estimate a model of college demand. We find that disclosure changes college choice by reducing uncertainty about earnings outcomes, but that its impact is limited by strong student preferences for non-pecuniary degree attributes.
Keywords: No keywords provided
JEL Codes: H0; H52; I22; I23; I24; I26; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low-earning college degree programs (A22) | students' earnings expectations (I26) |
| earnings disclosure (J31) | demand for low-return degrees (J24) |
| earnings disclosure (J31) | likelihood of low-income students remaining in college for at least four years (I24) |
| earnings disclosure (J31) | students learn about earnings (J31) |
| students' preferences for non-pecuniary attributes (D29) | overall impact of changes in beliefs on enrollment decisions (D91) |