Risk aversion and college subject

We investigate whether individual attitudes toward risk may explain why, though there exist huge differences in the employment returns of graduates by fields of study, the most demanded subjects by the economy are less frequently chosen. The econometric methodology is based on a three step procedure which controls for selectivity bias in the first stage (Heckman, 1979; Lee, 1983; Trost and Lee, 1984). Using a large data set from a survey on the 2001 Italian high school graduates, the main results indicate that students take into account the a priori probability of unsuccess when choosing the college subject. Moreover, students coming from a lower socio-economic background display more risk aversion.