Do income levels determine SAT scores?

Prof Mankiw raises a super question on the topic.

He points to a Leonhardt article who looks at how low income individuals are not really accepted by top colleges in US. The low incomes lead students to study at homes and lower SAT scores. Whereas rich ones get a better tuition and other facilities leading to higher SAT scores and acceptance in colleges. This leads to colleges underappreciating the effort put in by low-income people. This leads to wastage of human capital as good students who don’t have the opportunity are sidelined by the system. As good education usually leads to good income in future, it is kind of vicious cycle as well.

Leonhardt says:

Does more economic diversity necessarily mean lower admissions standards? No, it does not.

The truth is that many of the most capable low- and middle-income students attendcommunity colleges or less selective four-year colleges close to their home. Doing so makes them less likely to graduate from college at all, research has shown. Incredibly, only 44 percent of low-income high school seniors with high standardized test scores enroll in a four-year college, according to a Century Foundation report — compared with about 50 percent of high-income seniors who have average test scores.

“The extent of wasted human capital,” wrote the report’s authors, Anthony P. Carnevale and Jeff Strohl, “is phenomenal.”

This comparison understates the problem, too, because SAT scores are hardly a pure measure of merit. Well-off students often receive SAT coaching and take the test more than once, Mr. Marx notes, and top colleges reward them for doing both. Colleges also reward students for overseas travel and elaborate community service projects. “Colleges don’t recognize, in the same way, if you work at the neighborhood 7-Eleven to support your family,” he adds.

Leonhardt points to efforts of  Anthony Marx who became the president of Amherst College and enrolled more people with lower incomes.

In other words, SAT is not a true measure of student’s ability.  Mankiw says for this relation of poor predictive power of SAT scores , he would love to see this regression:

David suggests that high-income applicants’ SAT scores are, in some sense, an overstated measure of ability, because these applicants have the benefit of tutors, mulitiple testing opportunities, and so on. As a result, he says that we should correct for this by giving a preference to lower-income applicants.

Maybe David is right, but to convince me, here is what I would like to see.  Regress some measure of college success (such as GPA) on SAT scores and the student’s family income.  If David is right, then the coefficient on family income should be negative.  That is, a lower-income student should do better in college, holding reported SAT score constant, because he managed to get that SAT score without all those extra benefits.  This is a regression that some enterprising college admissions committee could easily do.  (Maybe someone has already done it, and I am just not aware of the study.)

If the coefficient does turn out to be significantly negative, that finding would provide strong evidence for the thesis of David’s article.  Right now, I would venture to guess that the data would not support David’s story, but I am always ready to be proven wrong.

Mankiw gets comments from Todd Stinebrickner, an economist at The University of Western Ontario. Todd says the opposite:

As part of an ongoing in-depth case study at one particular school (motivated particularly by an interest in college dropout), we discuss this issue and run the type of regression you suggest in Table 3 of a 2003 JHR paper “Understanding educational outcomes of students from low-income families.”  It is worth noting that everyone in our sample is of moderate or low family income. Regardless, within the income groups we examine, students from higher income backgrounds have significantly higher grades throughout college conditional on college entrance exam (ACT) scores.

Mankiw says this high income is going to be seen as a positive with college people:

What this means is that if you are a college admissions officer trying to identify the students who will do best in college, as measured by grades, you would give positive rather than negative weight on family income. I am not proposing that they should do this, as colleges have many goals when putting together a class. But it does seem that the hypothesis implicit in Leonhardt’s article in not supported by the data.

Hmmm…What about other factors? For instance lower-income would imply lesser attention on health which might affect education as well (we usually assume health affects education but new research has shown education affects health as well) . Then low income family students usually have to do other tasks like part-time work etc to support families. This might be affecting their education as well.

Overall this is very interesting. In US where despite good SAT score, college has the discretion to admit you. Hence may be incomes are being looked at. This is not the case here in India where people are selected based on how they fare in the school exams/entrance test to move into College/IIT (though higher income people do enter by other means as well in colleges). At school level yes, parents incomes are becoming the most important parameter.

We usually assume that tests like IIT-JEE and CAT select the best students. Do students who have higher income backgrounds clear these tests more than lower income students? The same things apply here as well. High income students can take tests multiple times (given the limit on number of tests one can take) and get tuitions which is highly expensive these days. Same options are not available to low income students. I have seen examples of both kind so cannot say unless look at the data.

One way to assess this would be to see how many students who clear IITs demand scholarships as they can’t pay the fees. If the demand for scholarships has risen, one is seeing lower income students making it more through IITs with time. Otherwise we are seeing higher income students making it more. If second bit is true, how does IIT ensure that low income students get an equal chance? 

Some would say in IITs there is already a quota which reserves seats for students of backward castes. One assumes people in these cases to be low income and hence it takes care. But one could have lower income people in general category as well. And higher incomes in backward castes as well. This complicates the analysis.

It will be really interesting to look at the answers to these questions.

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2 Responses to “Do income levels determine SAT scores?”

  1. do income levels determine sat scores mostly economics - Malay Site | 2011 Says:

    [...] this link: Do income levels determine SAT scores? « Mostly Economics This entry was posted in Education and tagged based-on-how, being-looked, case, [...]

  2. Raghupathi Acharya Says:

    Thanks for the post. Its high time, in India one should have reservations only on economic criteria.

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