Knowing Who You Are: The Effect of Feedback on Short and Long Term Outcomes

Abstract      

We study the effect of disclosing relative performance information (feedback) on students’ performance in high-school, on subsequent university enrolment, and on expected subsequent earnings. We exploit a large-scale natural experiment in which students in some cohorts receive information about their relative performance within their schools and across the nation. Using unique primary data, we find an asymmetric response to feedback: high-achieving students improve their final-year performance by 0.15 of a standard deviation, whereas the final-year performance of low-achieving students drops by 0.3 of a standard deviation. The results are more pronounced for females, indicating greater sensitivity to feed-back. We also document the long-term effects of feedback: high-achieving students reduce their repetition rate for the national exams; they enrol into university departments that are more prestigious by 0.15 of a standard deviation and their expected annual earnings increase by 0.17 of a standard deviation. By contrast, the results for low-achieving students are negative. We provide suggestive evidence that feedback encourages students from low-income neighborhoods to enrol in university and to study in higher-quality programs, which may in the long run, reduce income inequality.