Updating Human Capital Decisions: Evidence from SAT Score Shocks and College Applications

Bond, Timothy N. and Bulman, George and Li, Xiaoxiao and Smith, Jonathan (2016): Updating Human Capital Decisions: Evidence from SAT Score Shocks and College Applications.

Abstract

We estimate whether students update their collegepplication portfolios in response to large, unanticipated information shocks generated by the release of SAT scores -- a primary component of admissions decisions. Exploiting new population data on the timing of college selection and a policy that induces students to choose colleges prior to taking exam, we find that the release of scores causes students to update their portfolios in terms of selectivity, tuition, and sector. However, the magnitude of updating is too modest to significantly reduce unexplained variation across students, suggesting that non-academic factors may be the dominant determinants of college choice.

• Item Type: MPRA Paper
• Language: English
• Keywords: college choice; learning; SAT
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I20 - General; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity

References

Abramitzky, Ran, and Victor Lavy. 2014. "How Responsive is Investment in Schooling to Changes in Redistributive Policies and in Returns?" Econometrica 82(4): 1241-1272.

Altonji, Joseph G. 1993. "The Demand for and Return to Education When Education Outcomes are Uncertain." Journal of Labor Economics 11(1): 48-83.

Altonji, Joseph G., and Charles R. Pierret. 2001. "Employer Learning and Statistical Discrimination." The Quarterly Journal of Economics 116(1): 313-350.

Altonji, Joseph G., Erica Blom, and Costas Meghir. 2012. "Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers." Annual Review of Economics 4: 185-223.

Arcidiacono, Peter, Esteban Aucejo, Arnaud Maurel, and Tyler Ransom. 2015. "College Attrition and the Dynamics of Information Revelation." Working Paper.

Arcidiacono, Peter, Patrick Bayer, and Aurel Hizmo. 2010. "Beyond Signaling and Human Capital: Education and the Revelation of Ability." American Economic Journal: Applied Economics 2(4):76-104.

Arcidiacono, Peter, V. Joseph Hotz, and Songman Kang. 2012. "Modeling College Major Choices Using Elicited Measures of Expectations and Counterfactuals." Journal of Econometrics 166(1): 3-16.

Attanasio, Orazio P., and Katja M. Kaufmann. 2009 "Educational Choices, Subjective Expectations, and Credit Constraints." NBER Working Paper 15087.

Avery, Christopher, and Thomas J. Kane. 2004. "Student Perceptions of College Opportunities: The Boston COACH Program." In College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, ed. C. Hoxby, 355-394. Chicago: University of Chicago Press.

Behrman, Jere R., Mark R. Rosenzweig, and Paul Taubman. 1996. "College Choice and Wages: Estimates Using Data on Female Twins." The Review of Economics and Statistics 78(4): 672-685.

Bettinger, Eric, Bridget Terry Long, Philip Oreopoulos, and Lisa Sanbonmatsu. 2012. "The Role of Application Assistance and Information in College Decisions: The H&R Block FAFSA Experiment." The Quarterly Journal of Economics 127(3): 1205-1242.

Black, Dan A., and Jeffrey A. Smith. 2006. "Estimating the Returns to College Quality with Multiple Proxies for Quality." Journal of Labor Economics 24(3): 701-728.

Bond, Timothy N. and Kevin Lang. 2013. "The evolution of the Black-White test score gap in Grades K-3: The fragility of results." Review of Economics and Statistics, 95 (5): 1468-1479.

Bond, Timothy N. and Kevin Lang. 2014. "The Sad Truth About Happiness Scales." NBER Working Paper 19950.

Bulman, George. 2015. "The Effect of Access to College Assessments on Enrollment and Attainment." American Economic Journal: Applied Economics 7(4): 1-37.

Card, David, and Alan B. Krueger. 2005. "Would the Elimination of Affirmative Action Affect Highly Qualified Minority Applicants? Evidence from California and Texas." Industrial and Labor Relations Review 58(3): 414-434.

Carrell, Scott and Bruce Sacerdote. 2012. "Late Interventions Matter Too: The Case of College Coaching in New Hampshire." NBER Working Paper 19031.

Chade, Hector, Gregory Lewis, and Lones Smith. 2014. "Student Portfolios and the College Admissions Problem." Review of Economic Studies 81(3): 971-1002.

Cohodes, Sarah R., and Joshua S. Goodman. 2014. "Merit Aid, College Quality, and College Completion: Massachusetts' Adams Scholarship as an In-Kind Subsidy." American Economic Journal: Applied Economics 6(4): 251-285.

Dillon, Eleanor, and Jeffrey Smith. 2016. "Determinants of the Match between Student Ability and College Quality." Journal of Labor Economics, forthcoming.

Dizon-Ross, Rebecca. 2014. "Parents' Perceptions and Children's Education: Experimental Evidence from Malawi." Working Paper.

Epple, Dennis, Richard Romano, and Holger Sieg. 2006. "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education." Econometrica 74(4): 885-928.

Farber, Henry S., and Robert Gibbons. 1996. "Learning and Wage Dynamics." The Quarterly Journal of Economics 111(4): 1007-1047.

Fu, Chao. 2014. "Equilibrium Tuition, Applications, Admissions, and Enrollment in the College Market." Journal of Political Economy 122(2): 225-281.

Goodman, Sarena F. 2013. "Learning from the Test: Raising Selective College Enrollment by Providing Information." Working Paper.

Hoekstra, Mark. 2009. "The Effect of Attending the Flagship State University on Earnings: A Discontinuity- Based Approach." The Review of Economics and Statistics 91(4): 717-724.

Hoxby, Caroline, and Sarah Turner. 2014. "Expanding College Opportunities for High-Achieving, Low Income Students." Stanford Institute for Economic Policy Research Discussion Paper 12-014.

Hoxby, Caroline M., and Christopher Avery. "The Missing 'One-Offs': The Hidden Supply of High-Achieving, Low-Income Students." NBER Working Paper 18586.

Hurwitz, Michael, Jonathan Smith, Sunny Niu, and Jessica Howell. 2014. "The Maine Question: How Is 4-Year College Enrollment Affected by Mandatory College Entrance Exams?" Educational Evaluation and Policy Analysis.

Jacob, Brian A., and Tamara Wilder Linkow. 2011. "Educational Expectations and Attainment." in Whither Opportunity, ed. Greg Duncan and Richard Murnane, New York: Russell Sage.

Jensen, Robert. 2010. "The (Perceived) Returns to Education and the Demand for Schooling." The Quarterly Journal of Economics 125(2): 515-548.

Kahn, Lisa B., and Fabian Lange. 2014. "Employer Learning, Productivity, and the Earnings Distribution: Evidence from Performance Measures." Review of Economic Studies 81: 1575-1613.

Klasik, Daniel. 2013. "The ACT of Enrollment: The College Enrollment Effects of State-Required College Entrance Exam Testing." Educational Researcher 42: 151-159.

Lange, Fabian. 2007. "The Speed of Employer Learning." Journal of Labor Economics 25(1): 1-35.

Manski, Charles. 1989. "Schooling as Experimentation: A Reappraisal of the Post-Secondary Drop-Out Phenomenon." Economics of Education Review 8(4): 305-312.

Oreopoulos, Phillip and Reuben Ford. 2016. \Keeping College Options Open: A Field Experiment to Help All High School Seniors Through the College Application Process." NBER Working Paper No. 22320.

Pallais, Amanda. 2015. "Small Differences that Matter: Mistakes in Applying to College." Journal of Labor Economics 33(2): 493-520.

Papay, John P., Richard J. Murnane, and John B Willett. 2011. "How Performance Information Affects Human-Capital Investment Decisions: The Impact of Test-Score Labels on Educational Outcomes." NBER Working Paper 17120.

Rockoff, Jonah E., Douglas O. Staiger, Thomas J. Kane, and Eric S. Taylor. 2012. "Information and Employee Evaluation: Evidence from a Randomized Intervention in Public Schools." American Economic Review 102(7): 3184-3213.

Smith, Jonathan, Matea Pender, and Jessica Howell. 2013. "The Full Extent of Student-College Academic Undermatch." Economics of Education Review 32: 247-261.

Stange, Kevin M. 2012. "An Empirical Investigation of the Option Value of College Enrollment." American Economic Journal: Applied Economics 4(1): 49-84.

Stinebrickner, Todd, and Ralph Stinebrickner. 2012. "Learning About Academic Ability and the College Drop-Out Decision." Journal of Labor Economics 30(4): 707-748.

Stinebrickner, Todd, and Ralph Stinebrickner. 2013. "A Major in Science? Initial Beliefs and Final Outcomes for College Major and Dropout." Review of Economic Studies 81(1): 426-472.

Vigdor, Jacob L., and Charles T. Clotfelter. 2003. "Retaking the SAT." Journal of Human Resources 38(1): 1-33.

Wiswall, Matthew and Basit Zafar. 2015. "Determinants of College Major Choice: Identification using an Information Experiment." Review of Economic Studies 82: 791-824.

Zafar, Basit. 2011 "How Do College Students Form Expectations?" Journal of Labor Economics 29(2): 301-348. 27.