Preferences and biases in educational choices and labor market expectations: shrinking the black box of gender

Ernesto Reuben, Matthew Wiswall () and Basit Zafar

No 627, Staff Reports from Federal Reserve Bank of New York

Abstract: Standard observed characteristics explain only part of the differences between men and women in education choices and labor market trajectories. Using an experiment to derive students' levels of overconfidence, and preferences for competitiveness and risk, this paper investigates whether these behavioral biases and preferences explain gender differences in college major choices and expected future earnings. In a sample of high-ability undergraduates, we find that competitiveness and overconfidence, but not risk aversion, are systematically related with expectations about future earnings: Individuals who are overconfident and overly competitive have significantly higher earnings expectations. Moreover, gender differences in overconfidence and competitiveness explain about 18 percent of the gender gap in earnings expectations. These experimental measures explain as much of the gender gap in earnings expectations as a rich set of control variables, including test scores and family background, and they are poorly proxied by these same control variables, underscoring that they represent independent variation. While expected earnings are related to college major choices, the experimental measures are not related with college major choice.

Keywords: risk aversion; earnings; competitiveness; overconfidence; college majors; gender differences; subjective expectations (search for similar items in EconPapers)
JEL-codes: D81 D84 I21 I23 J10 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2013-08-01
New Economics Papers: this item is included in nep-dem, nep-edu, nep-exp, nep-hrm, nep-ltv, nep-upt and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr627.html (text/html)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr627.pdf (application/pdf)

Related works:
Journal Article: Preferences and Biases in Educational Choices and Labour Market Expectations: Shrinking the Black Box of Gender (2017)
Working Paper: Preferences and Biases in Educational Choices and Labor Market Expectations: Shrinking the Black Box of Gender (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:627

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().