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Why the GRE reading comprehension test is fatally flawed

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Messy writing reveals messy thinking

The travesty is that candidates are blamed, via low scores, for their inability to comprehend this mess! Giving test-takers low scores for not comprehending poor quality writing is like blaming a victim for being mugged.

The other big problem with the GRE passages is that by virtue of being part of a standardized test, they implicitly portray the ideal of how text should be written. Infinitely more dangerously, this kind of writing can hide the truth.

Messy writing can hide the truth

Take for example the financial crisis of 2008. Bankers threw around terms like “leveraging”, sub-prime”, and “collateralized debt obligations”. Let’s return to the time before the crisis hit.

Say we have two bankers, each proposing a new strategy to their CEO, using the kind of language that would not be out of place in a financial services journal. One banker writes (in GRE passage style):

Our bank will experience a strong upturn in revenues with significant long-term upside potential through a pioneering and aggressive real-estate financial leveraging strategy that dramatically increases home-ownership rates across the nation. The strategy will expand our customer base to include a traditionally underserved and untapped market, subprime customers, who will benefit from the provision of maximum financial leverage with minimal bureaucratic requirements. This strategy will result in the building of tangible asset bases for these customers, and these assets can subsequently function as indefinitely appreciating real estate collateral against further leverage that will stimulate consumer spending, thereby aiding the growth of the national economy in the longer term. Potential sub-prime defaults will be offset by the introduction of innovative derivative financial instruments called Mortgage Backed Securities (MBS), Credit Default Swaps (CDS) and Collaterialized Debt Obligations (CDO). These instruments are designed to serve as risk mitigators, revenue generators and protective hedges against any defaults that occur. In the event of the real estate market undergoing an unforeseen downturn and the financial derivatives market facing robust challenges, the federal government is expected to perform a guarantor role in accordance with the stature, size and criticality of banking institutions.

The other banker writes:

OUR NEW PROFIT STRATEGY - GIVE OUT BAD LOANS

We will get new customers and earn big money by giving home-loans to people who don’t have proper jobs, incomes or assets. They won’t even have to put down a deposit or give us any documents. These people will almost certainly not be able to repay us.

These risky customers will then use their still-unpaid-for homes as collateral to spend more, getting even deeper into debt. This is not a problem because house prices will increase forever.

But since our bank could be at risk, we will sell off these bad loans to gullible investors chasing high returns, or we’ll take out insurance on the loans.

Bottom line: We win big either way – by selling the bad loans or by collecting insurance. If everything goes bust, the government will bail us out because we're too big to fail.

Both proposals mean the same thing. One is full of MBA-speak that sounds totally grown-up and professional (disclosure: I have an MBA). The second one sounds like it’s been written by a high-school student intern begging to be fired. I can easily imagine the first proposal being accepted for publication in a financial services journal, while the second one would be rejected outright.

You could argue that a professional banker would know exactly that the first proposal means. But when asked if they saw the financial crisis coming, many bankers admitted they hadn’t the foggiest idea of what was going on. No wonder. With foggy language, their brains got foggy too. Exactly the same result the GRE passages produce. Add some fat salaries and big bonuses, and there was no incentive for the bankers to get rid of their fogginess.

A man named Chuck Prince was the CEO of Citigroup, one of the banking giants battered by the financial crisis in 2008. Mr Prince “didn’t know a CDO from a grocery list” when he took over the bank, according to this article. A trader was quoted as saying that, “At worst he [Prince] perhaps should have known more about what was going on, but really he's just the nice old geezer at the top who shakes people's hands at cocktail parties.”

Well, Mr Prince didn’t need to know what a CDO, MBS or CDS was. If the strategy was presented to the “nice old geezer” in clear and direct language, I’m sure he would’ve taken barely a minute to figure out that the strategy was a ghastly idea. I have a sneaky suspicion that even well-intentioned bankers who used such ‘grown-up’ language were conned by their own words.

I’m going to make a small digression here. The GRE is offered as a computer-based test. But these computer-based tests are also a relic of a bygone era, when the internet didn’t exist. But now, with the web virtually everywhere, the ETS folks make a mistake in not having an online test, ie one that’s connected to the internet.

This is because when you place material online, you get a whole lot of firepower at your disposal – hyperlinks for example. We could even argue that because so much educational material is placed online, a true reading comprehension test would have passages that include hyperlinks and suchlike. Indeed, the head of Britain’s exams watchdog recently said the use of pens in written exams cannot go on. She was quoted as saying:

“They [students] use IT [Information Technology] as their natural medium for identifying and exploring new issues and deepening their knowledge…..Our school exams are running the risk of becoming invalid as their medium of pen and ink increasingly differs from the way in which youngsters learn."

This could pose a problem for countries in which internet access is problematic or expensive. But eventually, most countries will get there.

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© Chetan Dhruve