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How Performance Information Affects Human-Capital Investment Decisions: The Impact of Test-Score Labels on Educational Outcomes

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  • John P. Papay
  • Richard J. Murnane
  • John B. Willett

Abstract

Students receive abundant information about their educational performance, but how this information affects future educational-investment decisions is not well understood. Increasingly common sources of information are state-mandated standardized tests. On these tests, students receive a score and a label that summarizes their performance. Using a regression-discontinuity design, we find persistent effects of earning a more positive label on the college-going decisions of urban, low-income students. Consistent with a Bayesian-updating model, these effects are concentrated among students with weaker priors, specifically those who report before taking the test that they do not plan to attend a four-year college.

Suggested Citation

  • John P. Papay & Richard J. Murnane & John B. Willett, 2011. "How Performance Information Affects Human-Capital Investment Decisions: The Impact of Test-Score Labels on Educational Outcomes," NBER Working Papers 17120, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:17120
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    References listed on IDEAS

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    Cited by:

    1. Maresa Sprietsma, 2013. "Discrimination in grading: experimental evidence from primary school teachers," Empirical Economics, Springer, vol. 45(1), pages 523-538, August.
    2. Saniter, Nils & Siedler, Thomas, 2014. "The Effects of Occupational Knowledge: Job Information Centers, Educational Choices, and Labor Market Outcomes," IZA Discussion Papers 8100, Institute of Labor Economics (IZA).
    3. Timothy N. Bond & George Bulman & Xiaoxiao Li & Jonathan Smith, 2018. "Updating Human Capital Decisions: Evidence from SAT Score Shocks and College Applications," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 807-839.
    4. Judith Scott-Clayton & Olga Rodriguez, 2014. "Development, Discouragement, or Diversion? New Evidence on the Effects of College Remediation Policy," Education Finance and Policy, MIT Press, vol. 10(1), pages 4-45, November.
    5. Saniter, Nils & Schnitzlein, Daniel D. & Siedler, Thomas, 2019. "Occupational knowledge and educational mobility: Evidence from the introduction of job information centers," Economics of Education Review, Elsevier, vol. 69(C), pages 108-124.
    6. Sandra E. Black & Kalena E. Cortes & Jane Arnold Lincove, 2020. "Apply Yourself: Racial and Ethnic Differences in College Application," Education Finance and Policy, MIT Press, vol. 15(2), pages 209-240, Spring.
    7. Lex Borghans & Bart H H Golsteyn & Anders Stenberg, 2015. "Does Expert Advice Improve Educational Choice?," PLOS ONE, Public Library of Science, vol. 10(12), pages 1-28, December.
    8. Schwerdt, Guido & West, Martin R. & Winters, Marcus A., 2017. "The effects of test-based retention on student outcomes over time: Regression discontinuity evidence from Florida," Journal of Public Economics, Elsevier, vol. 152(C), pages 154-169.
    9. Bond, Timothy N. & Bulman, George & Li, Xiaoxiao & Smith, Jonathan, 2016. "Updated Expectations and College Application Portfolios," MPRA Paper 69317, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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