Tracking the Herd with a Shotgun — Why Do Peers Influence College Major Selection?

52 Pages Posted: 5 Jun 2021

See all articles by Mike Insler

Mike Insler

United States Naval Academy - Department of Economics

Ahmed Rahman

Lehigh University - Department of Economics

Katherine A. Smith

U.S. Naval Academy

Abstract

How do peers influence people's choices? We explore this fundamental question by exploiting unique data produced by, and a natural experiment conducted on, students from the United States Naval Academy (USNA). We develop a conceptual framework to highlight that individuals can emulate others for both information (social learning) and for socializing (network externalities). We then analyze data on the preliminary preferences and ultimate major selections of USNA freshmen, exploiting a rich set of covariates and the random assignment of students to peer groups. We find that students can be influenced by peers into selecting different academic paths relative to what they would have chosen on their own. Through random reassignments of certain student groups into new peer groups, we also explore the reasons why herding occurs. The preponderance of evidence suggests that social learning, as opposed to network externalities, is the key driver for herding behavior.

JEL Classification: D85, I21, I23, J24

Suggested Citation

Insler, Michael and Rahman, Ahmed and Smith, Katherine A., Tracking the Herd with a Shotgun — Why Do Peers Influence College Major Selection?. Available at SSRN: https://ssrn.com/abstract=3860592 or http://dx.doi.org/10.2139/ssrn.3860592

Michael Insler (Contact Author)

United States Naval Academy - Department of Economics ( email )

589 McNair Road
Annapolis, MD 21402
United States

Ahmed Rahman

Lehigh University - Department of Economics ( email )

620 Taylor Street
Bethlehem, PA 18015
United States

Katherine A. Smith

U.S. Naval Academy ( email )

121 Blake Road
Annapolis, MD 21402-5000
United States

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