Thursday, March 8, 2018

Follow the Money: How Endorsements Influence Entry

Applications are part of life. Some are minor, like applying for a library card; some are consequential, like applying for a job. Often the consequential ones involve selection of a few from many, like applications for work or study admission. We usually think that they should be decided based on merit. Partly this is because we care about fairness, and partly it is because the selection matters for the workplace and the school too, not just for the applicant. Selecting the best should give the best results.

So what exactly is the purpose of having others endorse your application? Maybe you have never done that, but it is common for applicants to have others contact individuals who could sway the decision. Is it a way of cheating, by bypassing the evaluation of merit? Is it a way to get attention so the merit gets considered more carefully? Or is it simply useless? The question is important because so many crucial decisions happen through application processes in which some but not all applicants are endorsed. A recent paper in Administrative Science Quarterly by Emilio J. Castilla and Ben A. Rissing has looked closely at what happens, using applications to an MBA program as their data. The results are interesting.

The dim view of endorsements as saying nothing (good) about quality is at least partly true. The endorsed applicants were sometimes (not always) rated as stronger “on paper” as seen through CVs but often were scored lower than the non-endorsed applicants in interviews. Yet in the end, endorsed applicants were more likely to be selected for program admission – twice as likely, in fact. Clearly, getting endorsed is a good idea for those who are almost good enough to make it based on merit. This is not because their applications are examined more carefully. There was no evidence that the same qualification was discovered more easily when the applicant was endorsed. Instead, the endorsed applicant was more likely to be selected even if his or her qualifications were good but not the best.

Maybe there is something about the endorsed applicants that test scores and interview responses can’t discover? Well, Castilla and Rissing also looked at what happened later. Among those who got admitted, the endorsed applicants were no more likely to receive awards. Or get higher grades. Or get higher salary or signing bonuses in their first jobs. Or have higher salary growth. Essentially they were the same as non-endorsed applicants in their performance after being admitted, both at school and after school.

But there were two differences. One seems minor but is interesting. Endorsed applicants were more likely to lead a student club while in the program. Maybe endorsement is a sign of good citizenship? The other is not minor at all. Endorsed applicants gave larger donations to the school five years after graduation. So in a way, it is better to select endorsed applicants, but it is in a follow-the-money way. They repay the favor of being selected, while those who were selected purely on merit have less reason to pay back – or maybe they have less (family) money.

Castilla, Emilio J., and Ben A. Rissing. 2018. "Best in Class: The Returns on Application Endorsements in Higher Education." Administrative Science Quarterly, forthcoming.