Journal of Econometrics, 121(1-2):297-317. July-August 2004.
The methods used in most SAT validity studies cannot be justified by any sample selection assumptions and are uninformative about the source of the SAT’s predictive power. A new omitted variables estimator is proposed; plausibly consistent estimates of the SAT’s contribution to predictions of University of California freshman grade point averages are about 20% smaller than the usual methods imply. Moreover, much of the SAT’s predictive power is found to derive from its correlation with high school demographic characteristics: The orthogonal portion of SAT scores is notably less predictive of future performance than is the unadjusted score.