'(Un)informed College and Major Choice': Verification in an Alternate Setting. CEDR Working Paper. WP #2015-11

The decision to pursue formal education has significant labor market implications. To approach the decision rationally, a student must consider the costs and benefits of each available option. However, mounting empirical evidence suggests that reported expectations of costs and benefits are uncertain and vary across students. Hastings et al. (2015) (hereafter HNRZ) provide a basic theoretical frame-work for differences in student beliefs based on the costs of information gathering. Students who value financial outcomes less or who must pay a high cost to gather information are likely to gather less information. Based on this model, HNRZ highlights five predictions, detailed in this report. Each prediction is an implication of differing costs of information across groups or student preferences. HNRZ evaluated these predictions using Chilean data and and support for them. As they note, there is a need for the model to be tested in alternate settings. This paper evaluates four of these predictions using the data set from Huntington-Klein (2015) (hereafter HK), which comes from a 2012 survey of 1,224 high school juniors and seniors near Seattle, Washington, and focuses on differing levels of education rather than major choice. More details about survey design, survey administration, and response rates are in Huntington-Klein (2015).