Working Paper: NBER ID: w8536
Authors: Sean Nicholson; Nicholas S. Souleles
Abstract: In spite of the important role of income expectations in economics, economists know little about how people actually form these expectations. We use a unique data set that contains the explicit income expectations of medical students over a 25-year time period to examine how students form income expectations. We examine whether students condition their expectations on their own ability, contemporaneous physician income, and the ex post income of physicians in their medical school cohort. We then test whether a model that uses the students' explicit income expectations to predict their specialty choices has a better fit than a model that assumes income expectations are formed statically, and a model that bases income expectations on ex post income.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| medical students' expected income (J44) | students' perceived abilities (D29) |
| medical students' expected income (J44) | contemporaneous income of practicing physicians (J44) |
| medical students' expected income (J44) | ex post income of their medical school cohort (I24) |
| students' ability to foresee income trends (G53) | students' expected income (I26) |
| explicit income expectations (E25) | specialty choices (Z00) |
| students' perceived abilities (D29) | specialty choices (Z00) |
| contemporaneous income of practicing physicians (J44) | specialty choices (Z00) |
| ex post income of their medical school cohort (I24) | specialty choices (Z00) |