Iman Dadgar, PhD student at SOFI, Stockholm University, presents empirical work on the effect of the academic ordinal rank position of Swedish grade 9 students relative to their school peers on subsequent educational achievement and adult earnings. The results show evidence of a positive impact.

Iman Dadgar's study investigates an aspect of the peer effects literature which has until recently received relatively little attention; the importance of the ordinal rank position of a student in the school in terms of academic achievement

The results show evidence of a positive impact of being more highly ranked in the class, and the effects are concentrated to the top and the bottom of the ordinal rank distribution. High-ability students from low-income families gain the most from having a higher ordinal rank in grade 9. The results contrast US findings, which have suggested a similar impact across the rank distribution.

Effects are estimated from Swedish register data for full cohorts of students during the 1990s. The impact of the ordinal rank on long term outcomes can therefore be evaluate when the students are in their 30s. This is an important benefit, as the data provides outcome measures that more accurately measure individuals’ long-term labor market outcomes, compared to previous studies within this literature. For instance, income is measured by averaging over the observed annual earnings at age 30–33.

The large dataset allows testing of multiple hypothesis. For example, the gains by high-ability students is larger among those from low-income families than among those from high-income families. Yet, the policy implications of ordinal rank effects are unclear since we do not yet know enough about the underlying mechanisms.

Are rank effects due to how schools allocate resources, including teachers’ time, attention, and goodwill? Does a higher rank boost confidence or act as a motivator for future effort? Are the effects of rank symmetric? We would like to be able to harness the potentially beneficial effects of ordinal rank -
especially for those from families from low socio-economic status - without harming others. At the very least, educators should be made more aware of the disadvantages associated with a low ordinal rank and work towards reducing the degree of disadvantage that persists into the future.