How do college students choose their majors from those long lists in their university catalogs? Education professionals often credit a passion or a particularly influential teacher for how young people determine what to study. But a new data set has made it possible to examine the topic more closely, and it turns out that the state of the economy is a significant factor students consider when picking their majors.
Chicago Harris Assistant Professor Benjamin Keys recently found that students who were exposed to high unemployment rates while they were in school selected majors that earn higher wages and that have better employment prospects. In fact, in a new working paper he and his coauthors, Erica Blom of Edgeworth Economics and Brian C. Cadena of the University of Colorado, established that in response to recessions, students often choose fields of study that are more challenging and that require more math. They also determined that women are more responsive to the business cycle than men and are more likely to shift majors.
According to the paper, “a one percentage point increase in the unemployment rate leads to a 3.2 percentage point total reallocation of majors for men, and a 4.1 percentage point reallocation for women.”
“That finding is consistent with a longer literature that shows women pay more attention to the signals they receive from the labor market, whereas men just sort of plow ahead with a plan regardless of what the economy is telling them,” Keys explained.
Keys and his coauthors used data collected from the American Community Survey (ACS), a statistical survey run by the Census Bureau that takes a 1 percent sampling of the nation’s population every year. Since its inception in 2009, it has included a question that asks college graduates to identify their majors. The researchers pooled five years of the survey’s results from that question, which resulted in answers from cohorts that graduated over a 50-year period. “There was a sense previously that we could not pin down some of the data because there wasn’t a large enough sample size and there was very little survey data on college majors,” Keys added.
The trio examined the data against the business cycle. In assembling their findings, they developed several statistical methods that allowed them to control for long-term changes in the job market—such as the economy’s greater emphasis on technology and the explosive increase in the number of women entering universities—in order to examine how students approach school in times of economic downturns. This allowed them to establish that in trying times, more students view college as a human capital investment, something that can give them options as they move forward in their careers, rather than as consumption. Therefore, science, technology, engineering and math (STEM) careers become more attractive and more students, both men and women, study in those areas as everyone moves away from what are seen as traditionally female fields, such as teaching and sociology.
“This is an area of intense focus, whether the United States is producing enough STEM graduates and whether the rest of the world is improving in that area faster than we are,” Keys said. “What this shows is that in a recession there is a notable increase in people majoring in STEM who are coming in with the same skill set as those who enter school in good times and don’t choose those majors. So now we know there is a latent group of people who could study in STEM fields and are choosing not to, which is something that really needs to be examined from a policy perspective.”