Attracting students to economics: Evidence from a natural experiment

Hans Fricke, Jeffrey Grogger, Andreas Steinmayr 23 July 2015

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Labour market outcomes vary dramatically by college major (see, for example, Kirkebøen et al. 2015). Indeed, wage differences between some majors are as big as the wage gap between college and high school graduates (Altonji et al. 2012). Such economic considerations influence students’ major choices. At the same time, we know that students’ tastes and abilities also influence their decisions (see Altonji 1993, Stinebrickner and Stinebrickner 2014, Zafar 2011, 2013). Aptitudes and tastes determine how much students enjoy their coursework, how much time and effort they invest towards their degree, and how much they expect to enjoy a job that is related to their major.

However, when students start college, they have imperfect knowledge, both about the content of various majors and about their own tastes and abilities. Our question of interest is what role exposure plays in resolving this uncertainty. The problem is important beyond just the field of economics. If exposure is valuable, then education systems where students specialise late in their educational careers may do a better job of matching students to fields of study (Malamud 2010, 2011).

Up to now we know little about how exposure affects a student’s major decision. A principal reason is that students self-select into courses, and they generally select courses that they think will be interesting. As a result, using course selection to estimate how exposure influences choice of major could confound the effect of preferences with the actual effect of exposure.

A natural experiment

To identify the effect of exposure on major choice, we rely on a natural experiment at the University of St Gallen, which offers studies in the fields of business, economics, law, law and economics, and international affairs. Coursework for first-year students is almost identical irrespective of the student’s intended major. However, in addition to coursework, the first-year curriculum involves a substantial first-year paper, the goal of which is to familiarise students with academic writing. Each student must write a paper in one of the three core fields: business, economics, or law. The paper addresses a topic in a field that is set by a teaching assistant. A typical example for a topic in economics is: “How did the financial crisis fuel the price of gold?”.

Students may state their preferences for fields, but because business is oversubscribed, students are not necessarily assigned their preferred choice. Among students wishing to write in business, the university assigns the field of the first-year paper in a quasi-random way that is unrelated to student characteristics. This allows us to identify the effect of exposure to economics and law on subsequent major choices and on other student outcomes.

Results

We find that being assigned to write a paper in economics increases the probability of majoring in economics by 2.7 percentage points, compared to students who were assigned their preferred field of business. This is equal to 17.6% of the share of students who major in economics at the University of St Gallen. Being assigned to write in law increases the probability of studying law by 1.6 percentage points. Furthermore, we find that being assigned to economics positively influences grades in introductory economic courses.

A surprising finding is that these results are quite sex-specific. Exposure to economics only affects male students’ major choices, whereas exposure to law only affects female students’ choices. Thus, exposure to the field apparently does not help explain why relatively few women major in economics.

Conclusion

How far these results would generalise to other settings is hard to judge. On the one hand, switching to economics may not be too great a stretch for students originally inclined toward business. A student intending to major in English, in contrast, might be less affected by writing even a lengthy paper in economics. On the other hand, most students are exposed to new fields via coursework, which may represent a more intensive form of exposure than even a lengthy research paper. If so, exposure via coursework may have greater effects than the exposure we analyse here.

References

Altonji, J G (1993), “The Demand for and Return to Education When Education Outcomes Are Uncertain”, Journal of Labor Economics 11 (1): 48–83.

Altonji, J G, E Blom, and C Meghir (2012), “Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers”, Annual Review of Economics 4 (1): 185–223.

Fricke, H, J Grogger, and A Steinmayr (2015), “Does Exposure to Economics Bring New Majors to the Field? Evidence from a Natural Experiment”, IZA Discussion Paper 9003. Institute for the Study of Labor.

Kirkebøen, L, E Leuven, and M Mogstad (2014), “Field of Study, Earnings, and Self-Selection”, NBER Working Paper 20816.

Malamud, O (2010), “Breadth versus Depth: The Timing of Specialization in Higher Education”, LABOUR 24 (4): 359–90.

Malamud, O (2011), “Discovering One’s Talent: Learning from Academic Specialization”, Industrial and Labor Relations Review 64 (2): 375–405.

Stinebrickner, R, and T Stinebrickner (2014), “A Major in Science? Initial Beliefs and Final Outcomes for College Major and Dropout”, Review of Economic Studies 81 (1): 426–72.

Zafar, B (2011), “How Do College Students Form Expectations?”, Journal of Labor Economics 29 (2): 301–48.

Zafar, B (2013), “College Major Choice and the Gender Gap,” Journal of Human Resources 48 (3): 545–95.

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Topics:  Education Frontiers of economic research

Tags:  education choice, courses exposure, studying economics

PhD student in economics and finance, University of St. Gallen

Irving Harris Professor in Urban Policy, Chicago Harris

Assistant Professor in the Department of Economics at the University of Munich

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