No abstract

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We use a large-scale survey and field experiment to evaluate a policy that provided information about college-and major-specific earnings and cost outcomes to college applicants in Chile. The intervention was administered by the Chilean government and reached 30% of student loan applicants. We show that the low-income and low-achieving students who apply to low-earning college degree programs overestimate earnings for past graduates by over 100%, while beliefs for high-achieving students are correctly centered. Treatment causes low-income students to reduce their demand for low-return degrees by 4.6%, and increases the likelihood they remain in college for at least four years. To understand the mechanisms driving the effect of disclosure policies we estimate a model of college demand. We find that disclosure changes college choice by reducing uncertainty about earnings outcomes, but that its impact is limited by strong student preferences for non-pecuniary degree attributes.

This paper studies how welfare outcomes in centralized school choice depend on the assignment mechanism when participants are not fully informed. Using a survey of school choice participants in a strategic setting, we show that beliefs about admissions chances differ from rational expectations values and predict choice behavior. To quantify the welfare costs of belief errors, we estimate a model of school choice that incorporates subjective beliefs. We evaluate the equilibrium effects of switching to a strategy-proof deferred acceptance algorithm, and of improving households' belief accuracy. We find that a switch to truthful reporting in the DA mechanism offers welfare improvements over the baseline given the belief errors we observe in the data, but that an analyst who assumed families had accurate beliefs would have reached the opposite conclusion.

This paper asks whether elite colleges help students outside of historically advantaged groups reach top positions in the economy. I combine administrative data on income and leadership teams at publicly traded firms with a regression discontinuity design based on admissions rules at elite business-focused degree programs in Chile. The 1.8% of college students admitted to these programs account for 41%of leadership positions and 39% of top 0.1% incomes. Admission raises the number of leadership positions students hold by 44% and their probability of attaining a top 0.1% income by 51%. However, these gains are driven by male applicants from high-tuition private high schools, with zero effects for female students or students from other school types with similar admissions test scores. Admissions effects are equal to 38% of the gap in rates of top attainment by gender and 54% of the gap by high school background for male students. A difference-in-differences analysis of the rates at which pairs of students lead the same firms suggests that peer ties formed between college classmates from similar backgrounds may play an important role in driving the observed effects.1 The analysis proceeds in three steps. I first present new descriptive evidence on the distribution of firm leadership and top income attainment by educational background and student characteristics. I use data on the population of college-bound high-school graduates 3 from 1980 through 2001, and focus on two measures of top attainment: holding an executive management position or board seat at a publicly traded firm, or having an income in the top 0.1% of the observed income distribution. I measure these outcomes for students who are between 12 and 39 years removed from the year of college application, or roughly ages 30 through 57. This allows time for students to complete schooling and reach their career peaks. I find that the 1.8% of students admitted to three business-focused majors at the two most selective universities in Chile (henceforth 'elite degree programs') make up 41% of all directors and top managers, 27% of the top 1% of the income distribution between 2005 and 2013, 39% of the top 0.1%, and 45% of the top 0.01%. The gap between rates of leadership attainment at these elite degree programs and the average program is roughly similar to the gap observed in the US between Ivy League graduates and the average college graduate. Conditional on selectivity, major matters: students in top business-focused programs are 16.6 times more likely to have an income within the top 0.1% of the distribution than students in equally selective medical programs, where average incomes are also high. For students at elite degree programs, gender and family background are critical determinants of top attainment. Taking attendance at a hightuition private high school as a proxy for parental SES, I find that compared to male students from other backgrounds (female students), high-SES male students hold 3.4 (6.7) times more leadership positions and are 4.2 (11.4) t...