 Grades as signals of comparative advantage: How letter grades affect major choicesHongyan Li and Xing Xia Journal of Economic Behavior & Organization, 2024, vol. 227, issue C Abstract: Can noisy signals about comparative advantage have long-term effects on major choices and later-life outcomes? We study the effects of grades in introductory courses on students’ choice of major and labor market outcomes. Students in our setting observe their letter grades but not the underlying scores (0-100). Using a regression-discontinuity design, we find that students just above a letter-grade cutoff in an introductory course are 3.6% more likely to major in the same field as that course. We find larger effects on students with noisier priors about their comparative advantage and in fields with higher income-GPA gradients. These results are consistent with a model where students with incomplete information learn about their comparative advantage in different fields through introductory course grades. Keywords: College major; Human capital; Regression discontinuity; Learning about comparative advantage (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:227:y:2024:i:c:s0167268124003317 DOI: 10.1016/j.jebo.2024.106717 Access Statistics for this article Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D. More articles in Journal of Economic Behavior & Organization from Elsevier |
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