Rank and peer effects in higher education: Evidence from India

College education is an important milestone in life. Consequently, there is acute pressure to enrol in more selective colleges as they are expected to provide better teachers, infrastructure, brand value, networking opportunities, and academically high-achieving peers. Current evidence on the effects of enrolling in more selective educational institutions is mixed and largely focuses on test scores and labour market outcomes (Sekhri 2020, Pop-Eleches and Urquiola 2013). However, more selective environments can also pose a challenge for students who have lower ordinal rank among their peers. The psychological strain arising from these relative rank concerns may not allow some students to reap the benefits of a more selective environment (Marsh et al. 2008, Elsner and Isphording, 2017, Murphy & Weinhardt 2020).

In Dasgupta, Mani, Sharma and Singhal (2020), we examine the impacts of enrolling in a more selective college on academic outcomes, economic preferences, and on socioemotional traits typically associated with favourable labour market outcomes (Almlund et al. 2011).

Our setting: The University of Delhi

The University of Delhi (DU) is a large top-ranked public university in India consisting of various colleges offering three-year undergraduate programs. College admissions are typically determined by applicants’ high school exit exam scores. Students apply to colleges in DU using a common form where they state their high school exit exam scores and select the colleges and disciplines they wish to apply to. Based on the capacity constraints and applicants’ performance, colleges then announce their own discipline-specific cutoffs. Students are eligible for admission if their scores are at or above the announced cutoffs.

Study design

These cutoffs create an environment where students, who are ex-ante similar, get placed in colleges of varying selectivity depending on whether they are just above or just below the college-discipline-specific cutoffs. Students’ inability to manipulate the admission cutoffs enables a regression discontinuity design wherein we compare students just above the cutoff with those just below to study the causal impact of enrolling in a more selective college. In this scenario, students who are just above the announced cutoff find themselves surrounded by peers who have outperformed them in high school. On the other hand, students who miss the cutoff even by a whisker, end up in a less selective college where they are the relative high achievers.

We implement incentivised tasks to elicit students’ economic preferences related to competitiveness, risk appetite, and overconfidence (similar to Dasgupta et al. 2015). We also administered a survey to collect details including family background, academic performance in high school and college, and the Big Five personality traits: Openness to Experience, Conscientiousness, Extraversion, Agreeableness, and Emotional Stability.

Exploring peer and rank effects

• Notable gender-differentiated impacts on the cognitive and socioemotional returns of higher education emerge from our study. Marginally admitted females perform better on the standardised university exams than their counterparts in lower ranked colleges and their higher attendance rates are possibly driving this effect. These marginally admitted students also exhibit prudent economic preferences by making less risk-averse decisions in our incentivised task. This appears to be related to the influence of more academically able peer environments.
• Relative to counterparts in less selective colleges, the marginal female entrant in the more selective college also experiences a decrease in overconfidence. We believe this is affected by their relative rank concerns arising from being a “small fish in a big pond.” The marginal entrants in selective colleges are forced to update their beliefs about their ability as they are surrounded by high achieving peers, leading to a decrease in their overconfidence.
• Male students in more selective colleges experience no change in exam scores and are likely to have lower attendance rates compared to their counterparts enroled in the less selective colleges, where attendance likely has a direct relationship with academic performance.
• We find that male students in more selective colleges experience a sizable and significant decline in personality traits related to extraversion and conscientiousness, relative to their counterparts in less selective colleges. We believe these declines in male students’ personality can be related to the “small fish in a big pond” effect, where they experience concerns about their academic rank.
• There are no differences in teacher quality (measured by student-teacher ratios and class cancellations) around the cutoff.

Gendered implications

Being in a more selective school or college environment may not be beneficial in all respects. Personality traits matter and how one accommodates the performances of one’s peer environments seems critical. We find our effects to vary along gender lines where male students seem to be more susceptible to rank concerns. Being a "small fish in a big pond" appears to affect male students negatively on important personality traits, including conscientiousness. Female students, on the other hand, appear to respond to such rank concerns in a more productive way and benefit from being in the company of more high achieving peers in the selective college environment. This includes benefits both in terms of improved academic performances as well as judicious economic preferences.

References

Almlund, M, A L Duckworth, J J Heckman and T Kautz (2011), "Personality Psychology and Economics", in E A Hanushek, S Machin and L Woessmann, (eds.), Handbook of the Economics of Education, vol. 4, 1-181, Amsterdam: North-Holland.

Dasgupta, U, L Gangadharan, P Maitra, S Mani, and S Subramanian (2015), "Choosing to be Trained: Do Behavioral Traits Matter?", Journal of Economic Behavior & Organization 110: 145-159.

Dasgupta, U., S Mani, S Sharma and S Singhal (2020), "Effects of Peers and Rank on Cognition, Preferences and Personality", The Review of Economics and Statistics, forthcoming.

Elsner, B., and I Isphording (2017), "A Big Fish in a Small Pond: Ability, Rank and Human Capital Investment", Journal of Labor Economics 35(3): 787-828.

Marsh, H, M Seaton, U Trautwein, O Ludtke, K T Hau, A O’Mara, and R Craven (2008), "The Big Fish Little Pond Effect Stands up to Critical Scrutiny: Implications for Theory, Methodology, and Future Research", Educational Psychology Review 20(3): 319-350.

Murphy, R, and F Weinhardt (2020), "Top of the Class: The Importance of Ordinal Rank", The Review of Economic Studies 87(60): 2777-2826.

Pop-Eleches, C, and M Urquiola (2013), "Going to a Better School: Effects and Behavioral Responses", American Economic Review 103(4): 1289-1324.

Sekhri, S (2020), "Prestige Matters: Wage Premium and Value Addition in Elite Colleges", American Economic Journal: Applied Economics 12(3): 207-225.