We live in a society obsessed with test scores and maximum performance. Think of the SAT, ACT, GRE, GMAT, and LSAT. Though they take only a few hours, they are supposed to give schools and companies a snapshot of a student's abiding talents. But these tests are often spectacularly bad at forecasting performance in the real world. The SAT does a decent job (r2 = 0.12) of predicting the grades of a college freshman. It is, however, less effective at predicting achievement after graduation. LSAT scores bear virtually no correlation to career success as measure by income, life satisfaction, or public service. What does r2 mean in this context? Is it ethical for colleges to base admissions and financial aid decisions on scores alone? What role do these tests have at your own school?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter13: Regression And Forecasting Models
Section: Chapter Questions
Problem 40P: The Baker Company wants to develop a budget to predict how overhead costs vary with activity levels....
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We live in a society obsessed with test scores and maximum performance. Think of the SAT, ACT, GRE, GMAT, and LSAT. Though they take only a few hours, they are supposed to give schools and companies a snapshot of a student's abiding talents.

But these tests are often spectacularly bad at forecasting performance in the real world. The SAT does a decent job (r2 = 0.12) of predicting the grades of a college freshman.

It is, however, less effective at predicting achievement after graduation. LSAT scores bear virtually no correlation to career success as measure by income, life satisfaction, or public service.

What does r2 mean in this context? Is it ethical for colleges to base admissions and financial aid decisions on scores alone? What role do these tests have at your own school?

 

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