Summary

Assessments like standardized tests and teacher evaluations are central elements of educational systems. Assessments affect the behaviour of students, teachers, parents, schools, and policymakers through at least two channels: The information channel and the incentive channel. Students use the information to adjust study effort and to guide their course selection. Schools and teachers use information from assessments to evaluate teaching quality and the effectiveness of the applied methods. Educational programs use information from assessment results to sort students in educational programs and employers use the results as signals of productivity in their hiring decisions. Finally, policymakers use assessments in accountability systems to reward or penalize schools, and parents use information from assessment results to select schools. The incentive channel is a natural consequence of the information channel: Students are incentivized to work hard and do well in assessments to get access to educational programs and jobs. Teachers and schools are incentivized to do well to receive rewards or avoid punishments in accountability systems. The information channel is important for ensuring the most efficient human capital investments: students learn about the returns and costs of effort investments and about their abilities and comparative advantages. Teachers and schools learn about the most effective teaching methods. However, because of the strong incentives linked to assessments, both students and teachers might focus on optimizing assessment results at the cost of learning. Students might for example select tracks that maximize their grades instead of selecting tracks aligned with their interests and comparative advantages. Understanding the implications of assessments for the behaviour of students, parents, teachers, and schools is therefore necessary to achieve the overall goals of the educational system. Because education affects lifetime earnings, health, and well-being and assessments play an important role in individuals’ educational careers, assessments are also important for efficiency and equity across domains. Biases in assessments and the heterogeneity in access to assessments are sources of inequality in education according to gender, origin, and socioeconomic background. Finally, because assessment results also carry important consequences for individuals’ educational opportunities and in the labor market, they are a source of stress and reduced well-being.