NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Arpita Patnaik

Department of Economics
University of Wisconsin-Madison
1180 Observatory Drive
Madison, WI 53706

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: University of Wisconsin-Madison

NBER Working Papers and Publications

February 2020The Role of Heterogeneous Risk Preferences, Discount Rates, and Earnings Expectations in College Major Choice
with Joanna Venator, Matthew Wiswall, Basit Zafar: w26785
In this paper, we estimate a rich model of college major choice using a panel of experimentally-derived data. Our estimation strategy combines two types of data: data on self-reported beliefs about future earnings from potential human capital decisions and survey-based measures of risk and time preferences. We show how to use these data to identify a general life-cycle model, allowing for rich patterns of heterogeneous beliefs and preferences. Our data allow us to separate perceptions about the degree of risk or perceptions about the current versus future payoffs for a choice from the individual's preference for risk and patience. Comparing our estimates of the general model to estimates of models which ignore heterogeneity in risk and time preferences, we find that these restricted models...
 
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