If So-and-so Jumped Off a Bridge, Would You?

Fun new research:

In this paper we investigate whether peers' behavior influences the choice of college major, thus contributing to the mismatch of skills in the labor market. Using a newly constructed dataset, we are able to identify the endogenous effect of peers on such decisions through a novel identification strategy that solves the common econometric problems of studies of social interactions. Results show that, indeed, one is more likely to choose a major when many of her peers make the same choice. We also provide evidence on skills mismatch in terms of entry wages and occupation. We find that peers can divert students from majors in which they have a relative ability advantage, with adverse consequences on academic performance, entry wages and job satisfaction.

Advertisers have begun appreciating the idea that if "tastemakers" or otherwise popular and influential people pick up a habit or trend or product, then a lot of others will, too. Maybe the nation's engineering and science departments need to start recruiting the popular kids to join up.

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Ryan Avent is The Economist's economics correspondent and the primary contributor to Free Exchange, an economics blog

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