Market for trading IIT JEE toppers!

The Times of India reports of a market in trading top rankers to coaching centers for the joint entrance examination (JEE) for the prestigious Indian Institutes of Technologies (IITs).

The intensely competitive IIT coaching centers have for some time been one of the most lucrative slivers of the education market. These centers compete fiercely to attract the best possible students in the hope that their success, especially in securing one of the top ranks, will attract more students next year. In fact, every year, after the JEE results are announced, the major centers try to outdo each other to advertise their success in capturing the top ranks.

This competition and the demand for having the top rankers on their rolls is classic free-market. It has spawned many healthy trends associated with such competition - focus on quality and outcomes, coaching fee waivers to lure good students and potential top rankers, and so on. However, it has also unleashed some unhealthy trends. The Times report describes the modus operandi of one such trader, Mr Vishnu Agarwal,

"He first zeros in on the brightest students from the best-known IIT coaching classes who are most likely to clear the JEE. He then approaches other coaching classes in Mumbai, Hyderabad and Delhi and offers them the opportunity to administer their test series to these students. Once the JEE results are declared, the coaching class can include those who appeared for their test series as part of the total number of students from their institute who made it to the IITs. The test series is free of cost for students, who are sometimes even paid to write these tests. The coaching class pays Agarwal for the service."

Apart from trying to capture potential toppers, some coaching centers also try to attract those top rankers who were not their students after results are announced. These students and their families are offered massive sums to declare that they have taken courses with the coaching center. All these activities do not generate any efficiency improvements and, if anything, creates perverse incentives.