Volume 18, Number 4 (Fall) 1983
Hoffman, Dennis L., and Stuart A. Low. 1983. "Rationality and the Decision to Invest in Economics." Journal of Human Resources 18(4):480-520.
In the study reported here, we develop a theoretical model of occupational choice which is then specifically tailored to fit the market for economists over time. Economists typically assume that the world is relatively free of informational barriers and that agents carefully process vast amounts of information in making decisions. This study reveals whether economists' own occupational decisions are consistent with this world of rational, calculating agents. Results suggest that tests for the internal consistency of rational expectations and our model of occupational choice cannot be rejected, while the model provides a better explanation of the observed pattern of enrollments than does an alternative that assumes agents naively base decisions only on current wage conditions.
The authors are members of the Economics faculty at Arizona State
University.
* An earlier version of this paper was presented at the 1982 American Economic
Association meetings. Comments by Ronald Ehrenberg and Michael Lovell at the
meetings, two anonymous referees, William Boyes, Herb Kaufman, John McDowell,
and Don Schlagenhauf have proven helpful during our work on this paper. Any
remaining omissions or errors are our own. Finally, we thank Francis Boddy for
supplying data on economist salaries.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X