January 9, 2023, 11:00–12:30
Job Market Seminar
Many universities are reducing emphasis on standardized exam scores in admissions out of concern that the exams limit college access for students from disadvantaged backgrounds. This paper analyzes how such a policy change would affect enrollment patterns and graduation rates at four-year colleges in the United States. To do so, I build an equilibrium model in which colleges rebalance their admissions criteria towards other measurements of students’ human capital in the absence of standardized exam scores. The model allows high school students’ application decisions and human capital investments to respond endogenously to the admissions policy, while colleges adjust admissions thresholds to maximize their objectives. I estimate the model using data from the Education Longitudinal Study of 2002. I find that banning the SAT causes a small increase in college attendance for low-income students but has a negligible effect on the enrollment of under-represented minority (URM) students, despite estimating that many universities have substantial preferences for diversity. The reason for this result is that endogenous human capital investment and equilibrium responses by capacity-constrained colleges completely offset the diversifying effects of relying more on grades and allowing non SAT-takers to apply to college. Elite colleges are worse off after banning the SAT, as they enroll students with lower skills and see graduation rates drop by 3 pp, while completion rates rise at less selective schools. A separate policy that requires all students to take the exam raises college completion for URMs by 1.6 pp overall by helping schools to identify stronger students.