Correcting the predictive validity of a selection test for the effect of indirect range restriction

BACKGROUND: The validity of selection tests is underestimated if it is determined by simply calculating the predictor-outcome correlation found in the admitted group. This correlation is usually attenuated by two factors: (1) the combination of selection variables which can compensate for each other and (2) range restriction in predictor and outcome due to the absence of outcome measures for rejected applicants. METHODS: Here we demonstrate the logic of these artifacts in a situation typical for student selection tests and compare four different methods for their correction: two formulas for the correction of direct and indirect range restriction, expectation maximization algorithm (EM) and multiple imputation by chained equations (MICE). First we show with simulated data how a realistic estimation of predictive validity could be achieved; second we apply the same methods to empirical data from one medical school. RESULTS: The results of the four methods are very similar except for the direct range restriction formula which underestimated validity. CONCLUSION: For practical purposes Thorndike’s case C formula is a relatively straightforward solution to the range restriction problem, provided distributional assumptions are met. With EM and MICE more precision is obtained when distributional requirements are not met, but access to a sophisticated statistical package such as R is needed. The use of true score correlation has its own problems and does not seem to provide a better correction than other methods.