II. The Law School Admissions Test-- What Does it Measure and Why is it Used?

Every year, roughly 130,000 LSATs are administered to 115,000 people (about 12% of test-takers take the LSAT more than once) who spend four hours testing their analytical¹, logical, and reading comprehension skills.

The admissions process is a classic example of a market for imperfect information. Because admissions officers cannot determine the true ability of each applicant² in terms of academic aptitude³ due to discrepancies⁴ between college quality, recommendations, and courses, there is value to them in better information about applicants⁵. The only way to get standardized⁶ information about an applicant is to measure him with a uniform test. Therefore, the LSAT is used to homogenize one part of the law school application so that the admissions staff does not have to spend hours deciphering the true value of the applicant's other academic credentials⁷.

In the admissions process, evaluators often weigh LSATs roughly equal to GPA. Why is a four hour test given equal consideration as four years of hard work during college? Basically, the answer can be explained in another market-the market for law schools. Law schools compete with each other to attract the best applicants, so the reputation of the law school is of high importance to the institution. Reputation is relayed through what many consumers perceive as a trustworthy source of information, the U.S. News & World Report ranking of graduate institutions. U.S. News, in their valuation of law schools, counts LSAT as 50% of the student selectivity rating (more than GPA, which constitutes 40%), and 12.5% of the total score. Therefore, if a school's median LSAT is higher, its ranking is higher, and its marketability is higher also. As proof that law schools consider the rankings of high importance is the fact that a considerable number of schools lie to the magazine about their median LSAT score in order to improve their rankings. In fact, in 1994, 29 of the country's 177 law schools reported higher LSAT scores to U.S. News than to the American Bar Association, their accrediting⁸ body.' Moreover, admission officers, admittedly wary⁹ of the predictive value of the LSAT score, tell me that they place great weight on the score to improve their rankings so that they can move up in another game of imperfect information.

Aside from moving up in the rankings, do law schools benefit from admitting students with higher scores? Studies by Law School Admissions Council show that LSATs are in fact correlated with performance in law school. In their study titled "The Predictive Validity of LSAT," they claim that "LSAT alone continues to be a better predictor of law school performance than is [University] GPA alone" (23). Perhaps then, U.S. News & World Report is correct in counting LSATs more than GPA.

III. The Hiring Decision

As discussed above, when law firms hire applicants, they have no way of determining their true productivity (let's call it the underlying¹⁰ ability index), so they must use all tools available to them to estimate it. These tools are the quality of law school the applicant attended, his performance in law school, and his personality. With the exception of personality, it should be fairly simple to determine the applicant's underlying ability index. If those with higher ability rank higher in law school, then the quality of school and the applicant's class rank can give the law firm a good idea of the applicant's ability. The law school, both in its initial screening of applicants and then in its evaluation¹¹ of students, sends a signal to firms of applicants' abilities.

However, if this ability index is in fact highly correlated to LSAT score, why don't law firms ask for LSAT scores when they screen their applicants? Most of the recruiting coordinators I spoke¹³ to saw no reason to ask for scores since they hire applicants based on law school performance. Of course, since law school performance is positively¹⁴ correlated with LSAT scores, desirable applicants will most likely have high LSAT scores. One recruiting coordinator¹² explained that another reason firms don't ask for LSAT scores is that "schools tell employers not to ask [for scores] because they say it's offensive." Today, putting a great emphasis on standardized test scores is not politically correct. Portraying¹⁵ a bad image to law schools is costly¹⁶ for a firm, and therefore, it is safer for them not to ask applicants for their LSAT scores. Conversely, many patent firms and judges, two of the higher paying and most selective law-related professions, do ask applicants for their LSAT scores. Because they are the most prestigious disciplines, their returns for finding the best applicants are higher than in other areas and therefore, they do not hesitate to ask for LSAT scores

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