Having a high class rank in third grade, independent of test scores and other measures of achievement, positively affects long-term life outcomes, according to a new study.

Researchers have long known that high test scores in the early years of a student’s education are predictive of long-term academic success. The new study, however, demonstrates that class rank alone leads to better subsequent test scores, higher graduation rates, higher college graduation rates, and even higher earnings as adults.

A student enrolling in a class in third grade in which that student is at the 75th percentile relative to peers, rather than the 25th percentile, increases his or her real wages between the ages of 23-27 by $1,500 per year, or approximately 7%. The effect is particularly strong for nonwhite and low-income students.

“It may be that teachers and parents are more attentive to ordinal rank, where a student is relative to their immediate peers, than to more abstract indicators like test scores,” says Richard Murphy, assistant professor of economics at the University of Texas at Austin and coauthor of the study in the Review of Economics and Statistics.

“The kids who rank higher in their particular pond get more attention and resources, and come to think of themselves as better students, which helps them with their later studies. But the truth is we’re not sure why this happens. What the study shows is that it does happen.”

For the study of more than 3 million 8- and 9-year-old students in Texas, researchers looked for differences in the data based on gender, parental income, and race. The impact of rank on male and female students was similar for most outcomes.

In contrast, nonwhite students and those with free or reduced-price lunch are significantly more affected by class rank than their more advantaged counterparts. The data shows that disadvantaged groups gain more from being highly ranked and lose more from being lowly ranked among their peers.

The paper also explores the common trade-off parents face, given these rank-based peer effects. There are benefits to sending kids to schools with higher average test scores, but about 40% of the benefit is offset by the effect of the student then having a low rank.

“The ideal situation parents should look for,” says Murphy, “is a school that’s very effective at raising test scores where their child would also be highly ranked.”

The findings add to a well-established list of papers demonstrating that conditions for young children have long-lasting consequences. Researchers conclude that schools grouping students with rank and these effects in mind could improve overall outcomes. Schools may also influence student performance by manipulating the salience of rank.

Additional coauthors are from Brigham Young University and European University Viadrina.

Source: UT Austin