Megan McArdle is surely correct when she notes how much is expected today of young people who aspire to attend elite universities. Her own experience as a teenager was different:
…the things that we achieved were basically within reach of a normal human being who was going about the business of growing up: playing a sport, perhaps badly; taking classes; occasionally volunteering as a candy striper. Most of us took the SAT without the benefit of test prep services, and the “test prep” we got in class consisted of–learning vocabulary and algebra. People like me, who were painfully unathletic and had hashed some early high school classes still had a shot at an Ivy League School
These days, a nearly-perfect GPA is the barest requisite for an elite institution. You’re also supposed to be a top notch athlete and/or musician, the master of multiple extracurriculars. Summers should preferably be spent doing charitable work, hopefully in a foreign country, or failing that, at least attending some sort of advanced academic or athletic program.
She then raises a provocative question:
“This entire thing is absurd. I understand why kids engage in this ridiculous arms race. What I don’t understand is why admissions officers, who have presumably met some teenagers, and used to be one, actually reward it.”
Robert Frank and Phil Cook’s Winner-Take-All Society was written almost two decades ago, but its acute analysis of situations such as this remains relevant and informative today. Admission to an elite university is a classic winner-take-all-market. First, competition is intense because the number of competitors has grown (i.e., there was a time when you competed for a Harvard slot only against a narrow sociodemographic segment of Northeasterners — now all manner of people all over the world apply). Second, rewards are distributed based on relative rather than absolute performance and even a narrow advantage over other market participants can have enormous consequences. Third, the rewards are concentrated in the hands of a small number of winners. That is, if 10 applicants are fighting for a single slot at Harvard, there is no scenario under which they can each come out with 10% of the reward they seek, or even a scenario where the best candidate gets 30% of the reward, followed by the next person getting 20%, third place receiving 15% and everyone else getting 5%. Instead one person gets 100% of the reward and everyone else gets nothing.
This situation has generated what McArdle decries: An arms race that families hate yet at the same time are afraid to retreat from unilaterally. If no parent signed their teenager up for SAT prep courses, interview training and essay coaches, and no adolescent invested thousands of hours in resume-stuffing extracurricular activities, all parents and all adolescents would be better off and no one’s chance of getting into an elite university would be affected (Recall that in a winner-take-all-market, it’s relative performance that matters). The problem of course is that in a winner-take-all-market such as elite university admissions, once even a few people engage in these competitive behaviors it costs everyone else not to engage in them also. Hence begins an arm’s race that the participants are damaged by but will not unilaterally exit.
Frank and Cook note that in organized systems of competition, “positional arms control agreements” are possible. For example, athletic leagues can agree to test athletes for steroids, removing the pressure for everyone to take steroids because they fear someone else will do so and thereby gain a relative advantage. But the world’s parents and their children are not an organized system and could never agree to much less enforce such an arm’s control agreement.
McArdle clearly recognizes this as she isn’t blaming parents or asking them to do anything differently. Rather, she wants college admissions officers to stop rewarding kids who have over-stuffed, over-burnished resumes. That seems logical on its face, but another lesson of Frank and Cook’s work is that the people imposing brutal competition on others are sometimes trapped in a higher level such system themselves.
Frank and Cook cite the example of investment banking houses that refuse to hire anyone who didn’t graduate from a handful of Ivies. That creates a winner-take-all-market for young people who want an investment banking career. Don’t the people at the firms realize that brilliant young people graduate from a wide range of universities and that some certified witlings have Ivy league degrees?
Of course they do. However, if you are overseeing a division at the firm that makes a bad investment and loses millions of dollars, you must insulate yourself against being blamed by higher up management. One way to do that is to say “Look, I hired the very best people - it’s all Harvard and Princeton grads in my shop”. In contrast, if the investment team you oversee is full of Michigan State University grads (my alma mater) you will be vulnerable: “Your lax hiring standards made the firm lose money — you should have hired Ivy League grads like all the other division heads” (against whom of course YOU may be competing in a winner-take-all-market for year-end bonuses).
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