Why a decentralized admission exam is a bad idea, while centrally determined admission standards may be a good one ? Views from an Economist 23 Nov th UNIVERSITY FOUNDATION ETHICAL FORUM THE END OF FREE ENTRY ? V. Vandenberghe UCL- Economics Department Belgium Université Catholique de Louvain

Admission tests might generate « ex-post » benefits. Economists think they could also be « ex-ante » ones Admission tests is part of a more general discussion on the role of achievement/admission standards. Two questions are entangled in the economic literature at what level should the standard be set? what information should be generated by the standard setting process. The answer is that centralisation is preferable to decentralization and that binary standards are inferior to fuller information ones, in their effects on the incentives to acquire skills.

Brief outline 1. Belgium and admission standards 2. Economic analysis 3. Tentative lessons for Belgium 4. Further implications: admission standards and higher education finance

1. Belgium and admission standards The system in Belgium – that most people consider as synonymous with no-admission tests – is de facto a system where admission standards are defined in a very decentralized way By contrast, systems with central final exams at the end of secondary school (BAC, France; A-level, UK) or systems with admission exams or procedures at the entrance of tertiary establishments (SAT in the US) operate with centrally defined admission standards.

2. Economic analysis 2.1. Centralized vs decentralized admission test - The empirical evidence (Woessman 2006; Figlio 2004; Betts, 2000) Some economists produce evidence that centrally- defined admission (or achievement) standards lead, on average, to better scores among prospective students. They have a better level when they apply for tertiary education, suggesting that part of the benefits of (centrally defined) admission standards might emerge before tertiary education starts.

- Other economists (Costrell, 1994) developed models suggesting that students (and possibly teachers) confronted with centrally defined standards have more incentives to acquire (or produce) skills.

Suppose standard setters care about future & current well-being of pupils/students Being up to the standard requires effort and this comes at a cost in terms of current well- being But future well-being (ie, future wage, prestige...) derived from higher admission standard is higher

Raising standards always [C, D] comes at the same cost for pupils (or teachers)... but not the same benefit If there is a unique standard setter [C], future well- being (ie, future wage, prestige...) can be strictly proportional to the standard If standards are defined by each sec. school [D] future benefits also depend of what the other standard setters do. Incentives to raise standards are thus lower under decentralization Conclusion: Admission standards risk being set below their optimal level under decentralization [D]

2.2. Binary vs full-information standards Costrell' s models deliver a second message... binary standards generate more disincentives to succeed than continuous standards Assume a distribution of initial achievement (or ability) across the population If there is a unique standard, some individuals will be required to make more effort than others. If it is relatively high, a certain proportion of them will simply give up. That proportion can be reduced if there are 2, 3... N standards

A t-1 AtAt f(A t-1 ) etet F(AS 1 ) AS 1 e max

A t-1 AtAt f(A t-1 ) AS 1 AS 2 e max F(AS 2 ) etet

3. Tentative lessons for Belgium Admission tests orchestrated (collegially) by tertiary institutions would reduced the level of decentralization of standard setting in Belgium. That might have a positive effect on the level of achievement prior to admission. But limiting disincentive effects might require creating a continuum of tests of varying difficulty.

4. Admission tests and tertiary education finance With admission tests, the number of freshmen will drop, but not uniformly across universities. Hence, they might not be politically acceptable as long as the problem of financial compensations is not addressed. Admission tests would considerably reduce the « academic risk » attached to higher education investment. And this might pave the way to a bigger role for private finance (ie, higher tuition fees, funded via loans).

Conclusion Admission tests might be a good thing to increase the efficiency of basic education.... as long as they to not operate on a binary mode. We should have a range of admission tests of various difficulty. We need short and relatively easy programs that students can complete in 1 or 2 years, cohabiting with longer and more selective programs lasting 5, 6 or 8 years. The introduction of admission tests could activate reforms of finance mechanisms

References Betts, J. R. (1998). The Impact of Educational Standards on the Level and Distribution of Earnings. American Economic Review 88 (1): Costrell, R.t M. (1994). A Simple Model of Educational Standards. American Economic Review 84 (4): Costrell, R. M. “Can Centralized Educational Standards Raise Welfare?” Journal of Public Economics, 65, September 1997, Figlio, D. & Lucas, M.E. Do Higher Grading Standards Affect Student Performance? with Mel Lucas, Journal of Public Economics,Volume 88, Issues 9-10, August 2004, Pages Wößmann, L. (with Thomas Fuchs), "What Accounts for International Differences in Student Performance? A Re-Examination Using PISA Data", Empirical Economics, 2006