IDEAS home Printed from https://ideas.repec.org/a/bla/jemstr/v22y2013i1p58-77.html
   My bibliography  Save this article

Salience in Quality Disclosure: Evidence from the U.S. News College Rankings

Author

Listed:
  • Michael Luca
  • Jonathan Smith

Abstract

This paper investigates the impact of college rankings, and the visibility of those rankings, on students’ application decisions. Using natural experiments from U.S. News and World Report College Rankings, we present two main findings. First, we identify a causal impact of rankings on application decisions. When explicit rankings of colleges are published in U.S. News, a one‐rank improvement leads to a 1‐percentage‐point increase in the number of applications to that college. Second, we show that the response to the information represented in rankings depends on the way in which that information is presented. Rankings have no effect on application decisions when colleges are listed alphabetically, even when readers are provided data on college quality and the methodology used to calculate rankings. This finding provides evidence that the salience of information is a central determinant of a firm's demand function, even for purchases as large as college attendance.

Suggested Citation

  • Michael Luca & Jonathan Smith, 2013. "Salience in Quality Disclosure: Evidence from the U.S. News College Rankings," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(1), pages 58-77, March.
    • Handle: RePEc:bla:jemstr:v:22:y:2013:i:1:p:58-77
    DOI: jems.12003
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jems.12003
    Download Restriction: no
    File URL: https://libkey.io/jems.12003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
    2. Pope, Devin G., 2009. "Reacting to rankings: Evidence from "America's Best Hospitals"," Journal of Health Economics, Elsevier, vol. 28(6), pages 1154-1165, December.
    3. Smith Jonathan, 2013. "The Effect of College Applications on Enrollment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(1), pages 151-188, December.
    4. Amy Finkelstein, 2009. "E-ztax: Tax Salience and Tax Rates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 969-1010.
    5. Griffith, Amanda & Rask, Kevin, 2007. "The influence of the US News and World Report collegiate rankings on the matriculation decision of high-ability students: 1995-2004," Economics of Education Review, Elsevier, vol. 26(2), pages 244-255, April.
    6. Bruce Sacerdote, 2001. "Peer Effects with Random Assignment: Results for Dartmouth Roommates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 681-704.
    7. Stefano DellaVigna & Joshua M. Pollet, 2007. "Demographics and Industry Returns," American Economic Review, American Economic Association, vol. 97(5), pages 1667-1702, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meyer, Andrew G. & Hanson, Andrew R. & Hickman, Daniel C., 2017. "Perceptions of institutional quality: Evidence of limited attention to higher education rankings," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 241-258.
    2. Haisken-DeNew, John & Hasan, Syed & Jha, Nikhil & Sinning, Mathias, 2018. "Unawareness and selective disclosure: The effect of school quality information on property prices," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 449-464.
    3. Florian Englmaier & Arno Schmöller & Till Stowasser, 2018. "Price Discontinuities in an Online Market for Used Cars," Management Science, INFORMS, vol. 64(6), pages 2754-2766, June.
    4. Engström, Per & Forsell, Eskil, 2018. "Demand effects of consumers’ stated and revealed preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 43-61.
    5. Nicola Lacetera & Devin G. Pope & Justin R. Sydnor, 2012. "Heuristic Thinking and Limited Attention in the Car Market," American Economic Review, American Economic Association, vol. 102(5), pages 2206-2236, August.
    6. Thomas Fujiwara & Carlos Sanz, 2017. "Norms in bargaining: evidence from government formation in Spain," Working Papers 1741, Banco de España.
    7. Dewan, Ambuj & Neligh, Nathaniel, 2020. "Estimating information cost functions in models of rational inattention," Journal of Economic Theory, Elsevier, vol. 187(C).
    8. Zemin (Zachary) Zhong, 2022. "Chasing Diamonds and Crowns: Consumer Limited Attention and Seller Response," Management Science, INFORMS, vol. 68(6), pages 4380-4397, June.
    9. Xavier Gabaix, 2017. "Behavioral Inattention," NBER Working Papers 24096, National Bureau of Economic Research, Inc.
    10. Gibbons, Stephen & Neumayer, Eric & Perkins, Richard, 2015. "Student satisfaction, league tables and university applications: Evidence from Britain," Economics of Education Review, Elsevier, vol. 48(C), pages 148-164.
    11. Florian Englmaier & Andreas Roider & Uwe Sunde, 2017. "The Role of Communication of Performance Schemes: Evidence from a Field Experiment," Management Science, INFORMS, vol. 63(12), pages 4061-4080, December.
    12. Englmaier, Florian & Roider, Andreas & Sunde, Uwe, 2014. "The Role of Communication of Performance Schemes," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 507, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    13. Asmus Leth Olsen, 2013. "Leftmost-digit-bias in an enumerated public sector? An experiment on citizens' judgment of performance information," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(3), pages 365-371, May.
    14. Bradley, Sebastien, 2018. "Assessment limits and timing of real estate transactions," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 360-372.
    15. Michael Luca, 2011. "Reviews, Reputation, and Revenue: The Case of Yelp.com," Harvard Business School Working Papers 12-016, Harvard Business School, revised Mar 2016.
    16. Smith, Jonathan & Hurwitz, Michael & Howell, Jessica, 2015. "Screening mechanisms and student responses in the college market," Economics of Education Review, Elsevier, vol. 44(C), pages 17-28.
    17. repec:cup:judgdm:v:8:y:2013:i:3:p:365-371 is not listed on IDEAS
    18. Andreas R. Kostøl & Andreas S. Myhre, 2021. "Labor Supply Responses to Learning the Tax and Benefit Schedule," American Economic Review, American Economic Association, vol. 111(11), pages 3733-3766, November.
    19. Tasoff, Joshua & Letzler, Robert, 2014. "Everyone believes in redemption: Nudges and overoptimism in costly task completion," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 107-122.
    20. Tommaso Colussi & Ingo E. Isphording & Nico Pestel, 2021. "Minority Salience and Political Extremism," American Economic Journal: Applied Economics, American Economic Association, vol. 13(3), pages 237-271, July.
    21. Paskalev, Zdravko & Yildirim, Huseyin, 2017. "A theory of outsourced fundraising: Why dollars turn into “Pennies for Charity”," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 1-18.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jemstr:v:22:y:2013:i:1:p:58-77. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.kellogg.northwestern.edu/research/journals/JEMS/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.