Last week I posted on how decision markets might help students pick a college. Now consider colleges picking students. The obvious approach is to bet on student success given starting at a certain college in a certain season (perhaps also at a certain school of that college).
Things like US news and world report do a fairly good job of conveying the purely academic information about a school despite how much people dislike them because it hurts their pride. The reason they do so is not that they use a particularly succesful methodology but because people believe them. If you got all the students who attend harvard to all switch to some decent similarly sized state school you would probably find that in 10-15 years that school would be the best place to go in the country. Not only do professors like working with smart students but the people who have the biggest impact on students at college are other students, even academically.
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The big problem with college admissions is that the things that students need to know other than academic performance are deliberately obscured. Students need to know whether they are going to be happy, have fun and enjoy themselves (if they don't they probably won't perform either) but all colleges try to cover up the partying and student socialization aspects of campus life because it looks bad to parents and older folks.
I mean I went to caltech and it's hardly a hard partying drinking school but you can be sure that the official campus information didn't mention the fact that the students picking their own RAs meant no stupid attempts to get the people smoking a bit of pot or doing some drinking in trouble. Nor would they make a point in their literature of the fact that (despite a significant christian minority) it was probably one of the more atheist student bodies around. And caltech (because it's student body is so extreme) is a place that is least able to disguise the nature of the student body.
It's not that it's about drinking and drug use. It's about the fact that every college tries to portray it's student body as the perfect adult image of young studious fun meaning that students can't trust any information about the social scene from the college and short visitation weekends aren't long enough to convey it.
"but what are college admissions boards maximizing?"
This is the real issue. Admissions officers with access to essays and personal interviews and test scores and GPA have, in studies, done a worse job of predicting student GPA's than those with access to just test scores and GPA's. If the outcome is GPA or graduation rate, intelligent bettors would rely on these statistics and, thus, probably provide no new information (or very little new information).
The exact problem is that colleges are trying to maximize intangibles, such as how much a person will contribute to the "experience" of going to that school. Without a way to quantify intangibles, you cannot have a futures market in them, and thus no futures market can provide you with the information you want.
Unless of course there is some way to structure a futures market around unquantifiable characterstics; I can't imagine how, but that hardly means it cannot be done.
Lee, if we did not want to discourage students with bad news about their abilities, we would not tell them their grades on each an every assignment, as we do now.
A general question about betting markets: What about looping effects?
Suppose when some people see others betting against (with) their success, they do worse (better) than they otherwise would have. The market will take this psychological fact into account and betting odds will be adjusted toward the extremes, settling somewhere short of certainty only because of some diminishing margin of whatever.
The underlying real-world probabilities of these people's success will have changed because of the market. Is we find this objectionable, are we irrationally prefering the status quo?
Is there research on the extent to which people are (en/dis)couraged by being told the betting odds of their success?
Cynical, as I discussed in last week's post, traders could focus on bundles of students instead of individual students. Also, the college might post a summary interview score.
Mike, I'd think even 500 applicants and 200 accepted might be enough for a first trial.
Hm, would there be a way of spreading the cost around to multiple colleges for a trial? Several colleges have perhaps small segment of students whose success can be bet on, but the overall students in the trial is sufficiently large.
The information processing burden on prospective investors seem pretty prohibitive considering you'd have to evaluate each student individually. Payoffs would have to be large for this to work, very likely larger than could reasonably be expected...
It's also not at all clear whether such summarized information really is useful compared to additional (partly non objective and thus hard to summarize) information a college could gather during interviews. There's gotta be a reason why companies put applicants thru strenous interviews, after all.
Things like US news and world report do a fairly good job of conveying the purely academic information about a school despite how much people dislike them because it hurts their pride. The reason they do so is not that they use a particularly succesful methodology but because people believe them. If you got all the students who attend harvard to all switch to some decent similarly sized state school you would probably find that in 10-15 years that school would be the best place to go in the country. Not only do professors like working with smart students but the people who have the biggest impact on students at college are other students, even academically.
---
The big problem with college admissions is that the things that students need to know other than academic performance are deliberately obscured. Students need to know whether they are going to be happy, have fun and enjoy themselves (if they don't they probably won't perform either) but all colleges try to cover up the partying and student socialization aspects of campus life because it looks bad to parents and older folks.
I mean I went to caltech and it's hardly a hard partying drinking school but you can be sure that the official campus information didn't mention the fact that the students picking their own RAs meant no stupid attempts to get the people smoking a bit of pot or doing some drinking in trouble. Nor would they make a point in their literature of the fact that (despite a significant christian minority) it was probably one of the more atheist student bodies around. And caltech (because it's student body is so extreme) is a place that is least able to disguise the nature of the student body.
It's not that it's about drinking and drug use. It's about the fact that every college tries to portray it's student body as the perfect adult image of young studious fun meaning that students can't trust any information about the social scene from the college and short visitation weekends aren't long enough to convey it.
"but what are college admissions boards maximizing?"
This is the real issue. Admissions officers with access to essays and personal interviews and test scores and GPA have, in studies, done a worse job of predicting student GPA's than those with access to just test scores and GPA's. If the outcome is GPA or graduation rate, intelligent bettors would rely on these statistics and, thus, probably provide no new information (or very little new information).
The exact problem is that colleges are trying to maximize intangibles, such as how much a person will contribute to the "experience" of going to that school. Without a way to quantify intangibles, you cannot have a futures market in them, and thus no futures market can provide you with the information you want.
Unless of course there is some way to structure a futures market around unquantifiable characterstics; I can't imagine how, but that hardly means it cannot be done.
Lee, if we did not want to discourage students with bad news about their abilities, we would not tell them their grades on each an every assignment, as we do now.
A general question about betting markets: What about looping effects?
Suppose when some people see others betting against (with) their success, they do worse (better) than they otherwise would have. The market will take this psychological fact into account and betting odds will be adjusted toward the extremes, settling somewhere short of certainty only because of some diminishing margin of whatever.
The underlying real-world probabilities of these people's success will have changed because of the market. Is we find this objectionable, are we irrationally prefering the status quo?
Is there research on the extent to which people are (en/dis)couraged by being told the betting odds of their success?
Hm, maybe it would be possible to get 5 universities to volunteer 100 applicants to be bet on a piece, or 10 universities provide 50 applicants.
but what are college admissions boards maximizing?
Cynical, as I discussed in last week's post, traders could focus on bundles of students instead of individual students. Also, the college might post a summary interview score.
Mike, I'd think even 500 applicants and 200 accepted might be enough for a first trial.
Hm, would there be a way of spreading the cost around to multiple colleges for a trial? Several colleges have perhaps small segment of students whose success can be bet on, but the overall students in the trial is sufficiently large.
The information processing burden on prospective investors seem pretty prohibitive considering you'd have to evaluate each student individually. Payoffs would have to be large for this to work, very likely larger than could reasonably be expected...
It's also not at all clear whether such summarized information really is useful compared to additional (partly non objective and thus hard to summarize) information a college could gather during interviews. There's gotta be a reason why companies put applicants thru strenous interviews, after all.