The Effects of Earnings Disclosure on College Enrollment Decisions

Abstract

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.

Nudging in education

“…However, there was evidence that students were updating their views on employment prospects and that a small group of students who were disappointed by the information changed their education choice in response to the intervention. A Chilean experiment providing applicants for post-secondary federal student aid with information about earnings potentials and costs also found no effect on enrolment, but some effects on education choice for low-SES students who tended to switch to study programmes with a higher net value (Hastings, Neilson, & Zimmerman, 2015). A German experiment targeted districts with a large share of secondary school students from non-academic backgrounds.…”

College Choice as a Collective Decision

“…Education policy can benefit in the same way from a better understanding of targeting. Targeting becomes especially important in light of a new wave of college policies that provide outreach and information about college (e.g., Bleemer and Zafar ; College Affordability and Transparency Center ; Domina ; Hastings, Neilson, and Zimmerman ; Hoxby and Turner ; Jensen ; Swail and Perna ). These policies necessarily must choose which members of a household to focus on.…”

Learning about Oneself: The Effects of Performance Feedback on School Choice

“…First, the assignment system is regulated by strict and observable criteria: stated preferences on schools and scores in 1 See, e.g., Ajayi (2013) and Avery and Hoxby (2012). 2 Nguyen (2008), Jensen (2010) provide evidence on the effects of providing information about population-average returns to education, while Attanasio and Kaufmann (2014), Kaufmann (2014), , , Hastings, Neilson, and Zimmerman (2015) more narrowly focus on the role of subjective beliefs about future earnings. Hastings and Weinstein (2008), Mizala and Urquiola (2013) document the role of providing information about school quality.…”