In their acclaimed book Freakonomics, economist Steven Levitt and journalist Stephen Dubner shared the hidden side of everything from real estate agents to the KKK and so many things in between. Some years ago, we had the distinct privilege of setting up a cop show at NBC based on the tenets of Freakonomics with these remarkable authors. Today, we thought we’d share with our readers why admissions officers are very much like real estate agents. After all, both groups have the same misaligned incentives. Wondering how so? How do admissions officers and real estate agents all have misaligned incentives in their work? Wonder no more!
In real estate, as a buyer’s agent, the more a real estate agent’s client spends on a home purchase, the more the real estate agent will make in commission. Yet a buyer likely doesn’t want to pay any more than they have to for a home so it seems strange that their advocate would not share their same financial interest. As a seller’s agent, a seller wants to sell their home for the highest purchase price possible. But a seller’s agent will often push a seller to lower the price of the home so it doesn’t sit on the market and so the seller’s agent can take home their commission. After all, they receive no commission if the house sits.
In elite college admissions, admissions officers are tasked with getting students to apply. It’s why they visit so many high schools, attend so many college fairs, and host so many tours and information sessions. The more students who apply, invariably the lower the admission rate for the school will be, and the higher that school will be ranked in the all-important US News & World Report ranking. Yet they encourage so many students to apply even though many of these students have no shot on God’s green earth of earning admission. It’s why they’ll send brochures to C student. It so often makes no difference to them if the applicant is a strong or weak candidate. They just want to boost their numbers. Of course, this hurts college applicants who get overconfident from these brochures and words of encouragement, often wasting their Early Decision / Early Action card on an impossible reach school. Similarly, admissions officers at schools that are test-optional are not going to tell students with no scores that they don’t have as good of a chance of getting in as do students with great scores. And why? They just want them to apply — for the same reasoning.
Like the real estate agent and the buyer or seller, admissions officers often grapple with misaligned incentives. And, heck, some of them don’t grapple with the misaligned incentives at all. They embrace them!
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