Economic Preferences Predict Higher-Education Choices

Thomas F. Epper, Ernst Fehr, Kristoffer B. Hvidberg, Claus T. Kreiner, Søren Leth-Petersen, Basit Zafar and Claus Thustrup Kreiner

No 12954, CESifo Working Paper Series from CESifo

Abstract: We examine whether individual preferences predict higher education choices. According to standard human capital theory, differences in individuals’ time and risk preferences lead to differences in educational investments. Testing this hypothesis is challenging, as it requires measuring individuals’ preferences, doing so before they make educational investments, and subsequently observing their educational choices. We combine incentivized, experimentally elicited measures of time and risk preferences for a large, representative sample of 18–19-year-old Danes with administrative data on subsequent higher education choices, program-specific earnings trajectories, prior school performance, and family background. In line with theory, we find that more patient individuals choose longer education programs and programs with steeper early-career earnings profiles, while more risk-averse individuals select programs with lower earnings dispersion and reduced downside risk. These relationships remain strong after controlling for cognitive ability, prior academic performance, and family background. Our findings suggest that preferences have a substantial impact on real-world educational investments and have implications for educational sorting.

Keywords: risk preferences; time preferences; educational choices (search for similar items in EconPapers)
JEL-codes: C91 I23 I24 I26 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-edu, nep-eur and nep-ltv
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Related works:
Journal Article: Economic preferences predict higher-education choices (2026)
Working Paper: Economic preferences predict higher-education choices (2026)
Working Paper: Economic Preferences Predict Higher Education Choices (2026)
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