Recovering Ex Ante Returns and Preferences for Occupations using Subjective Expectations Data

Peter Arcidiacono (), V. Joseph Hotz, Arnaud Maurel and Teresa Romano ()
Additional contact information
Peter Arcidiacono: Duke University
Teresa Romano: Goucher College

No 8549, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We show that data on subjective expectations, especially on outcomes from counterfactual choices and choice probabilities, are a powerful tool in recovering ex ante treatment effects as well as preferences for different treatments. In this paper we focus on the choice of occupation, and use elicited beliefs from a sample of male undergraduates at Duke University. By asking individuals about potential earnings associated with counterfactual choices of college majors and occupations, we can recover the distribution of the ex ante monetary returns to particular occupations, and how these returns vary across majors. We then propose a model of occupational choice which allows us to link subjective data on earnings and choice probabilities with the non-pecuniary preferences for each occupation. We find large differences in expected earnings across occupations, and substantial heterogeneity across individuals in the corresponding ex ante returns. However, while sorting across occupations is partly driven by the ex ante monetary returns, non-monetary factors play a key role in this decision. Finally, our results point to the existence of sizable complementarities between college major and occupations, both in terms of earnings and non-monetary benefits.

Keywords: ex ante treatment effects; occupational choice; subjective expectations (search for similar items in EconPapers)
JEL-codes: C31 I23 J24 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2014-10
New Economics Papers: this item is included in nep-ecm, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Published - published in: Journal of Political Economy, 2020, 128 (12), 4475 - 4522

Downloads: (external link)
https://docs.iza.org/dp8549.pdf (application/pdf)

Related works:
Working Paper: Recovering Ex Ante Returns and Preferences for Occupations using Subjective Expectations Data (2014)
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:iza:izadps:dp8549

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().