Caroline M. Hoxby: Returns to College Majors in the U.S.


Monday, November 20, 2017, 12:00pm to 1:45pm


Allison Dining Room

Caroline M. Hoxby, Scott and Donya Bommer Professor of Economics, Stanford University.

Two papers will be presented:

Returns to College Majors in the U.S.

Raw differences in first-job earnings across college majors are often publicized as "returns to majors" in the U.S. Although they garner a great deal of attention and appear to influence students' choices, the raw differences are not plausibly the causal returns owing to selection. Specifically, students with different aptitude select different majors within each postsecondary institution and select different institutions (which cost different amounts).

In this paper, I compute the most plausibly causal returns to majors available by (i) using comprehensive and accurate administrative data; (ii) controlling flexibly for a student's pre-college aptitude and achievement; (iii) controlling flexibly for a student's postsecondary institution; (iv) controlling flexibility for students' pre-college family background and location; (v) accounting for differences in the costs of students' education. I find that early-job differences in earnings in college majors enormously exaggerate differences in plausibly causal lifetime returns.  The results suggest that, if we actually had experiment-based estimates of returns to college majors, the differences among majors would be even smaller.

Measuring Educational Opportunities for Students of All Incomes at Selective Universities: Accurate and Fair Measures

Various policy makers and commentators now propose or are trying to hold selective colleges and universities accountable for whether they provide opportunities equally to students of all income levels. This may be a laudable goal, but doing it with measures that misrepresent institutions' performance is unlikely to be helpful and may even generate perverse incentives. 

We explain why the two most popular measures, the Pell Grant and Bottom Quintile shares, substantially misrepresent what they claim to measure. We show that this is because the popular measures take no account of differences among institutions in the population of potential students that they face. These populations vary because (i) different areas of the U.S. have different income distributions, (ii) the relationship between family income and pre-college achievement varies by area of the U.S., and (iii) different institutions draw from different parts of the student achievement distribution. 

We show that if institutions were held accountable relative to their population of prospective students, institutions that are ranked highly on educational opportunity by the wrong-but-popular measures often rankly lowly on the accurate measure.

About the speaker

Caroline Hoxby is the Scott and Donya Bommer Professor of Economics at Stanford University, the Director of the Economics of Education Program at the National Bureau of Economic Research, and a Senior Fellow of the Hoover Institution and the Stanford Institute for Economic Policy Research. Before moving to Stanford in 2007, she was the Fried Professor of Economics and a Harvard College Professor at Harvard University (1994-2007).

Trained as a public finance and labor economist, Hoxby is one of the world's leading scholars in the Economics of Education. Her pioneering work in the field was transformative because she saw that applying economic thinking to education generates many important insights. Her work often draws upon models of investment, incentives, market design, finance, optimal pricing, social insurance, and behavioral economics. In addition, Hoxby is an ardent promoter of the use of scientific methods (when feasible) in education research. Under her mentorship at the NBER, work in the Economics of Education has expanded enormously and now features some of the most advanced research in economics, conducted by a young vibrant group of scholars.

Hoxby is a Principal Investigator of the Expanding College Opportunities project, a randomized controlled trial that had dramatic effects on low-income, high achievers' college-going. For work related to this project, she recently received The Smithsonian Institution's Ingenuity Award. Her research in this area began with a demonstration that low-income high achievers usually fail to apply to any selective college. This is despite the fact that they are extremely likely to be admitted and receive such generous financial aid that they usually pay much less to attend selective colleges than they do to attend non-selective schools. This issue is now being addressed systematically owing to the project's evidence that individualized but inexpensive informational interventions cause students to take fuller advantage of their opportunities.

In some of her other best known work on higher education, she explains the rising cost of college. She analyzes how the market for higher education works and has developed since WWII. She evaluates why some universities are much more productive than others. Recently, she has analyzed universities' endowment policies and the economics of online higher education. Her current research includes studies of colleges' value-added and how federal spending and tax policies affect college-going.

Her honors include The Smithsonian Institution's Ingenuity Award, The Thomas B. Fordham Prize for Distinguished Scholarship in Education, Global Leader of Tomorrow from the World Economic Forum, Carnegie Scholar, an Alfred P. Sloan Research Fellowship, a John M. Olin Fellowship, and a National Tax Association Award.

Hoxby is a renowned teacher and advisor and has received multiple honors recognizing these contributions. These include the John and Lydia Pearce Mitchell University Fellowship, Stanford Economics Teacher of the Year, and a Phi Beta Kappa prize.

Hoxby has a Ph.D. from MIT, studied at Oxford as a Rhodes Scholar, and obtained her baccalaureate degree summa cum laude from Harvard University.

Learn more about Caroline Hoxby's work


See also: Fall 2017