Information Avoidance in Education Investment

Work in education economics has shown that college undergraduates are systematically misinformed about how their choice of major is likely to affect future earnings, even though information about the major-earnings relationship can be obtained at low cost. Information avoidance, a behavioral phenomenon in which an individual is averse to obtaining costless information, could explain this information gap among college undergraduates. We test for information avoidance in a lab experiment in which undergraduate subjects supply their willingness to pay for information about the major-earnings relationship. We find that a material amount of subjects are willing to pay to avoid the earnings information, and that the rate of information avoidance decreases with respect to the instrumental value of the information.