SAT/ACT Scores, High-School GPA, and the Problem of Omitted Variable Bias: Why the UC Taskforce's Findings Are Spurious. Research & Occasional Paper Series: CSHE.1.2020

One of the major claims of the report of University of California's Task Force on Standardized Testing is that SAT and ACT scores are superior to high-school grades in predicting how students will perform at UC. This finding has been widely reported in the news media and cited in several editorials favoring UC's continued use of SAT/ACT scores in university admissions. But the claim is spurious, the statistical artifact of a classic methodological error: "omitted variable bias." Compared to high-school grades, SAT/ACT scores are much more strongly correlated with student demographics like family income, parental education, and race/ethnicity. As a result, when researchers omit student demographics in their prediction models, the predictive value of the tests is artificially inflated. When student demographics are included in the model, the findings are reversed: High-school grades in college-preparatory courses are actually the stronger predictor of UC student outcomes. The Task Force should go back to the drawing board and provide the UC community with more realistic estimates of the true value-added by the tests.