Quasi-rational students choosing their university major

How do university students select their major? We might hope that they would first identify all of the majors that are available, then carefully weigh up the costs and benefits (to them) of each available major, and then select the major that has the greatest net benefit to them. That is how a theoretically 'purely rational' student would choose, based on the cost-benefit principle. However, we know that real people are not purely rational. They are affected by a range of cognitive biases and make shortcuts in their decision-making. In other words, real people are quasi-rational.

So, how would a quasi-rational student select their major? This 2019 working paper by Richard Patterson (US Military Academy), Nolan Pope (University of Maryland), and Aaron Feudo (US Military Academy) provides a partial answer, at least in terms of identifying some of the biases that affect students in selecting their major.

Patterson et al. make use of data from 8777 students at the US Military Academy (USMA) at West Point, over the period from 2001 to 2015. At USMA, the first two years of the Bachelor's Degree are assigned to students automatically - they have no choice over the order of classes. Some classes are in the same semester and year for all students, while some are randomised between the first and second semester. Students must choose their major during the first semester of their sophomore year, and during that year they are randomised into whether they study economics and philosophy, or political science and geography, in each semester. So, during the semester that they first choose their major, students will have been studying one or other of those two pairs of courses.

Patterson et al. test whether the timing of courses matters for the selection of a major. For a purely rational student, the order in which they take courses should not matter, since the order doesn't affect either the costs or the benefits of each major. However, quasi-rational students are affected by availability bias. Availability bias arises when a decision-maker gives more weight to information that is readily available to them, which means information that they have received more recently, or information that is more salient or vivid. In either case (more recent information, or more salient or vivid information), that information will be more easily remembered and so it receives more weight in the decision.

In the case of selecting a major at USMA, Patterson et al. argue that the courses that students are taking in the first semester of their sophomore year will be more likely to be selected as a major, because of this availability bias. And indeed that is what they find:

...assignment to a course in the first semester of sophomore year increases the probability that a student will initially choose a corresponding major by 2.9 percentage points, or 110 percent. This result is highly precise and is significant at well beyond the 1 percent level.

The results continue to hold after controlling for student demographics, course and year fixed effects, demographic characteristics of classmates, and for the full course schedule. The results are the same regardless of the gender, race, or academic ability of the student. The results also hold regardless of how well the students performed in these classes, or how well they evaluated the courses at the end of the semester. Students at all levels of the grade distribution, and at all levels of course evaluation, were more likely to select the corresponding major of the courses they studied in the first semester of their sophomore year.

That's not the end of the quasi-rationality of these students though. After selecting their major in the first semester, there is very little that would stop a purely rational student from switching major in the second semester. The only cost is that they need to get a form signed by two academic advisors (one from the major they are switching out of, and one from the major they are switching into). However, a quasi-rational student is affected by status quo bias and loss aversion.

Loss aversion means that real people value losses much more than equivalent gains (in other words, they like to avoid losses much more than they like to capture equivalent gains). Loss aversion leads real people (including students) to avoid changing their minds, and to prefer the status quo. As Patterson et al. put it in this paper:

Once students select a major, they might experience psychological costs to switching majors. There may be several potential sources for this bias. For example, students might feel ownership of their initial choice and exhibit loss aversion...

Giving up something that students own (including our choice of a university major) is difficult, because it entails a loss (they lose the major that they were originally enrolled in). Patterson et al. find evidence for this status quo bias as well:

...the effects of first-semester assignment on graduating major are large and statistically significant... but about half the magnitude of the effects on initial major. First-semester assignment increases the probability that students select a corresponding major by between 1.4 and 1.5 percentage points (34 to 40 percent).

In other words, the effect of course order on selecting the major persists all the way through to graduation for some students. Some students do change major after the first semester of sophomore year, but not enough to eliminate the effect of course order on choice of major.

So, students are affected by both availability bias and status quo bias when they select their university major. They might also be affected by other biases as well, but this paper only provides evidence for those two biases. How should universities respond to this? If there are particular majors that universities want to steer students into (e.g. STEM), they could schedule students to do those courses at the time that students select their major. This might also be important if universities want to reduce gender or other biases in particular courses.

These results also suggest we should be cautious about having students select a university major before they begin their studies. Availability bias will lead students to be more likely to select into majors that are familiar because they are taught at high school (e.g. accounting) and less likely to select into majors that are not (e.g. marketing). They might also bias students in less affluent schools, where a full range of courses is less likely to be available, away from majors that are becoming less commonly taught (e.g. economics, sciences). Status quo bias then keeps those students in their initially-selected major, when some of them might be better off if they switched to a different major later.

Universities need to take care about how they set up course and major selection for students. The process itself, combined with the quasi-rationality of students, could easily lead to less desirable outcomes, for both students and for academic departments.

[HT: Marginal Revolution, last year]