Seth D. Zimmerman

Heterogeneous Beliefs and School Choice Mechanisms

This paper studies how welfare outcomes in centralized school choice depend on the assignment mechanism when participants are not fully informed. Using a survey of school choice participants in a strategic setting, we show that beliefs about admissions chances differ from rational expectations values and predict choice behavior. To quantify the welfare costs of belief errors, we estimate a model of school choice that incorporates subjective beliefs. We evaluate the equilibrium effects of switching to a strategy-proof deferred acceptance algorithm, and of improving households’ belief accuracy. We find that a switch to truthful reporting in the DA mechanism offers welfare improvements over the baseline given the belief errors we observe in the data, but that an analyst who assumed families had accurate beliefs would have reached the opposite conclusion. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Elite Colleges and Upward Mobility to Top Jobs and Top Incomes

This paper asks whether elite universities help students from modest socioeconomic backgrounds reach top positions in the economy. I combine administrative data on income and leadership teams at publicly traded firms with a regression discontinuity design based on admissions rules at elite business-focused degree programs in Chile. The 1.8% of college students admitted to these programs account for 41% of leadership positions and 38% of top 0.1% incomes. Admission raises the number of leadership positions students hold by 54% and their probability of attaining a top 0.1% income by 45%. However, these gains accrue only to applicants from high-tuition private high schools, not to students from other school types with similar admissions test scores. Admissions effects are equal to roughly half of the gap in rates of top attainment by high school background. A difference-in-differences analysis of the rates at which pairs of students lead the same firms indicates that peer ties formed between college classmates from similar backgrounds play an important role in driving the observed effects.