Economic Preferences Predict Higher Education Choices

Thomas F. Epper, Ernst Fehr, Kristoffer B. Hvidberg, Claus T. Kreiner, Soeren Leth-Petersen and Basit Zafar
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Thomas F. Epper: Department of Economics, University of Copenhagen, IESEG School of Management, University Lille
Kristoffer B. Hvidberg: Department of Economics, University of Copenhagen,
Claus T. Kreiner: Department of Economics, University of Copenhagen
Soeren Leth-Petersen: Department of Economics, University of Copenhagen
Basit Zafar: Department of Economics, University of Michigan

No 26-18, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

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, programspecific 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)
Pages: 29
Date: 2026-09-09
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https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_18-26.pdf (application/pdf)

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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Persistent link: https://EconPapers.repec.org/RePEc:kud:kucebi:2618

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