Belief Updating Among College Students: Evidence from Experimental Variation in Information

We investigate how college students form and update their beliefs about future earnings using a unique information experiment. We provide college students true information about the population distribution of earnings and observe how this information causes respondents to update their beliefs about their own future earnings. We show that college students are substantially misinformed about population earnings and logically revise their self-beliefs in response to the information we provide, with larger revisions when the information is more specific and is good news. We classify the updating behaviors observed and find that the majority of students are non-Bayesian updaters

Double Majors: One for Me, One for the Parents?

At least a quarter of college students in the United States graduate with more than one undergraduate major. This paper investigates how students decide on the composition of their paired majors - in other words, whether the majors chosen are substitutes or complements. Since students use both their preferences and their expectations about major-specific outcomes when choosing their majors, I collect innovative data on subjective expectations, drawn from a sample of Northwestern University sophomores. Despite showing substantial heterogeneity in beliefs, the students seem aware of differences across majors and have sensible beliefs about the outcomes. Students believe that their parents are more likely to approve majors associated with high social status and high returns in the labor market. I incorporate the subjective data in a choice model of double majors that also captures the notion of specialization. I find that enjoying the coursework and gaining approval of parents are the most important determinants in the choice of majors. The model estimates reject the hypothesis that students major in one field to pursue their own interests and in another for parents' approval. Instead, I find that gaining parents' approval and enjoying a field of study both academically and professionally are outcomes that students feel are important for both majors. However, I do find that students act strategically in their choice of majors by choosing ones that differ in their chances of completion and difficulty and in finding a job upon graduation

A Reflection on Economic Uncertainty and Fertility in Europe: The Narrative Framework

none5openVignoli, Daniele; Guetto, Raffaele; Bazzani, Giacomo; Pirani, Elena; Minello, AlessandraVignoli, Daniele; Guetto, Raffaele; Bazzani, Giacomo; Pirani, Elena; Minello, Alessandr

The Inflation Expectations of Firms: What Do They Look Like, are They Accurate, and Do They Matter?

The purpose of this paper is to answer the three questions in the title. Using a large monthly survey of businesses, we investigate the inflation expectations and uncertainties of firms. We document that, in the aggregate, firm inflation expectations are very similar to the predictions of professional forecasters for national inflation statistics, despite a somewhat greater heterogeneity of expectations that we attribute to the idiosyncratic cost structure firms face. We also show that firm inflation expectations bear little in common with the "prices in general" expectations reported by households. Next we show that, during our three-year sample, firm inflation expectations appear to be unbiased predictors of their year-ahead observed (perceived) inflation. We demonstrate that firms know what they don't know - that the accuracy of firm inflation expectations are significantly and positively related to their uncertainty about future inflation. And lastly, we demonstrate, by way of a cross-sectional Phillips curve, that firm inflation expectations are a useful addition to a policymaker's information set. We show that firms' inflation perceptions depend (importantly) on their expectations for inflation and their perception of firm-level slack

Investigating and modelling the perception of economic security in the survey of household income and wealth

The standard practice to predict economic behaviour has been to infer decision processes from the business cycle. Current decisions depend on the individual expectation of future variables including stock market returns, job loss, earning and social security benefit. Recently, several studies have looked at identifying how the effects of (subjective) perception affect the economic security of household well-being. After reviewing some preliminary concepts in this area, we implement a statistical model to analyse individual choices. We discuss properties and check their usefulness and consistency by means of data related to the Survey of Household Income and Wealth. An analysis of this model helps us understand individual uncertainty and how perception evolves over the life cycle conditioned by education and happiness. Some final remarks conclude the paper. © Springer-Verlag Italia 2012