The Winner's Curse in Test-Blind Admissions (link soon!)
When universities admit students without considering exam scores, how does this impact test effort? How well universities can screen students? The overall match? We examine these with evidence from the UK.
High-stakes final exams play two roles in university admissions: they give students an incentive to exert effort, and they give universities information with which to screen applicants, shaping the equilibrium match. We study these forces using the staggered rollout of unconditional offers in the UK, which let some students matriculate without requirements on their age-18 exams (A-levels). Students who accept an unconditional offer score 0.14 SD below those who decline one, conditional on observables. However, using a two-way fixed effects specification, we find that exposure to unconditional offers has precisely zero impact on students’ age-18 exam performance, indicating that the observed gap is driven by private information. Exposure to unconditional offers increases university matriculation by 1.1 percentage points, mostly at middle-tercile universities. A structural model that incorporates the value students place on certainty of admission shows that, in equilibrium, recipients’ gains come at the expense of non-recipients. Relative to a ban, unconditional offers lower total student welfare by 0.7%, hurting the three highest-achieving quartiles of students. Post-qualification admissions, under which students apply after receiving their scores, raise welfare by 12.5% through better sorting. Our results highlight how the distributional effects of admissions policies depend on student information, informing current policy debates in the UK.
This paper’s come a long way from its beginnings, and I’m very happy with how it’s turned out. There’s a lot more I’m now interested in studying in the UK, but I think this work answers some important questions about how university admissions should be designed.