Overconfidence in salary expectations after graduation

Abstract

We investigate the degree of overconfidence in earnings percentile expectations one year, five years, and ten years after graduation. The results reveal extreme overconfidence in the expected earnings percentile five years and ten years after graduation. This overconfidence is only marginally explained by various demographic variables, including gender, marital status, socioeconomic status, GPA, and the perceived difficulty in finding a job after graduation. A subsample of “highly motivated” finance students expects to earn less than regular students one and five years after graduation, but is more overconfident about its increasing earnings potential over time. The findings reported here are useful in managing graduates’ expectations as they enter the workforce.

Keywords:

• Earnings percentile
• earnings potential
• motivated student
• overconfidence
• salary expectation

Data availability statement

The data that support the findings of this study are available from the corresponding author, OS, upon reasonable request.