Student Earnings Expectations: Heterogeneity or Noise?

62 Pages Posted: 9 Nov 2016

See all articles by Luis Diaz-Serrano

Luis Diaz-Serrano

Universitat Rovira i Virgili; IZA Institute of Labor Economics

Joop Hartog

University of Amsterdam - Faculty of Economics and Business (FEB); Tinbergen Institute; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

William Nilsson

University of the Balearic Islands

Hans van Ophem

University of Amsterdam - Faculty of Economics and Business (FEB); Tinbergen Institute

Po Yang

Peking University

Date Written: September 2016

Abstract

Students’ choices in education can only be based on expected outcomes. Econometric models that infer expectations based on ex post outcomes impose a rational structure of expectations on school performance and post-graduation earnings. Direct surveys suggest much ignorance and fuzziness. We use survey data on expectations in four universities in three countries and check for relations of expected probability to graduate and of expected earnings with personal abilities and attitudes. We find that most of the difference in expectations among individuals is just noise.

Keywords: student expectations, earnings, earnings dispersion, risk attitudes

JEL Classification: I210, I260, J240, D830

Suggested Citation

Diaz-Serrano, Luis and Hartog, Joop and Nilsson, William and van Ophem, Hans and Yang, Po, Student Earnings Expectations: Heterogeneity or Noise? (September 2016). CESifo Working Paper Series No. 6110. Available at SSRN: https://ssrn.com/abstract=2866951

Luis Diaz-Serrano

Universitat Rovira i Virgili ( email )

Campus Sescelades, Carretera de Valls s/n
43006 Tarragona, Tarragona 43007
Spain

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Joop Hartog (Contact Author)

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

William Nilsson

University of the Balearic Islands ( email )

Crtra. Valldemossa, km 7.5
Ed. Ramon Llull
Palma de Mallorca, Illles Balears 07122
Spain

Hans Van Ophem

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Po Yang

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

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