Journal of Labor Economics Vol. 33 No. 2 2015
Small Differences That Matter: Mistakes in Applying to College
Abstract
In 1997, the ACT increased the number of free score reports it provided to students from three to four, maintaining a $6 marginal cost for each additional report. In response to this $6 cost change, ACT-takers sent many more score reports and applications relative to SAT-takers. They widened the range of colleges they sent scores to, and low-income ACT-takers attended more-selective colleges. Back-of-the-envelope calculations suggest that the policy substantially increased low-income students’ expected earnings. This sizable behavioral change in response to such a small cost change suggests that in this setting, small policy perturbations can have large effects on welfare.
- DOI
- 10.1086/678520
- Volume
- 33
- Issue
- 2
- Pages
- 493-520
- Language
- en
- Sources
- openalex crossref