Recovering Ex Ante Returns and Preferences for Occupations Using Subjective Expectations Data
Abstract
We show that data on subjective expectations, especially on outcomes from counterfactual
choices and choice probabilities, are a powerful tool in recovering ex ante treatment
effects as well as preferences for different treatments. In this paper we focus on
the choice of occupation, and use elicited beliefs from a sample of male undergraduates
at Duke University. By asking individuals about potential earnings associated with
counterfactual choices of college majors and occupations, we can recover the distribution
of the ex ante monetary returns to particular occupations, and how these returns vary
across majors. We then propose a model of occupational choice which allows us to link
subjective data on earnings and choice probabilities with the non-pecuniary preferences
for each occupation. We find large differences in expected earnings across occupations,
and substantial heterogeneity across individuals in the corresponding ex ante returns.
However, while sorting across occupations is partly driven by the ex ante monetary
returns, non-monetary factors play a key role in this decision. Finally, our results
point to the existence of sizable complementarities between college major and occupations,
both in terms of earnings and non-monetary benefits.
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https://hdl.handle.net/10161/13088Collections
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Arnaud Maurel
Associate Professor of Economics
Professor Maurel’s research focuses on labor economics, economics of education, and
microeconometrics. Most of his non-methodological work lies at the intersection between
the economics of education and labor economics, with a focus on post-secondary education
demand and occupational choices. On the methodological side, his research is concerned
with the identification and estimation of selection and treatment effect models, and the
combination of subjective expectations and observati

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