Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/89845 
Year of Publication: 
2013
Series/Report no.: 
IZA Discussion Papers No. 7579
Publisher: 
Institute for the Study of Labor (IZA), Bonn
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, is 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% 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.
Subjects: 
college majors
earnings
gender differences
subjective expectations
risk aversion
overconfidence
competitiveness
JEL: 
D81
D84
I21
I23
J10
Document Type: 
Working Paper

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