Scholastic aptitude test scores and the economic returns to college education

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Montana State University - Bozeman, College of Agriculture


Student scores on standardized achievement tests fell during the 1960's, raising questions about the quality of education in America. The decline was especially pronounced on the Scholastic Aptitude Test (SAT), the most widely used college entrance examination. Much of this decline remains unexplained. This study examines the hypothesis that declining returns to college education played a role in the score decline. Specifically, it is hypothesized that declining returns to education reduce the incentive for students to invest in the college skills which the SAT attempts to measure. This study proposes a general model in which SAT participation rates and SAT scores are determined in part by the relative wage differential between an average college graduate and a high school graduate. several empirical specifications of this model are then estimated, using aggregate time series data for the years 1967 to 1987. The methods of three stage least squares and seemingly unrelated regressions are used. The results of the regressions suggest that fluctuations in the relative economic return to a college education may have accounted for between 11 percent,and 24 percent of the decline in average SAT scores. When these effects are considered in conjunction with those of a demographic variable, approximately 40 percent of the decline is explained, perhaps suggesting that fears of declining educational quality are somewhat exaggerated.




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