Should we care about rankings?

Rankings are everywhere. But what does it all mean? According to Niro Sivanathan and his co-authors, it matters a lot. And not in the obvious way you might think.

Rankings are everywhere. Whether it's boxers, brands or business schools, people can’t resist a list. Understanding people’s compulsion to classify, the media outlets regularly rejig these status reports; biennially, monthly, even dynamically in some cases.

But what does it all mean? Should you care whether you are rapidly ascending the rankings, rather than plunging down them? Yes, it appears. It matters a lot, according to 'Rising Stars and Sinking Ships: Consequences of Status Momentum' by Nathan C Pettit (New York University), Niro Sivanathan (London Business School), Eric Gladstone (Cornell University) and Jennifer Carson Marr (Georgia Institute of Technology). And not in the obvious way you might think.

Given that many rankings are regularly reassessed, the authors investigated what difference a change in rankings might make to perceptions of status. They also considered whether any change in perception of status was significant in practical terms. If it changed consumer behaviour, for example.

Direction of travel was critical. We instinctively understand Newtonian mechanics; mass and velocity create momentum, moving bodies advance until forces impede them. When an individual moves up the power rankings, for example, we expect them to continue their ascent. Likewise for an individual heading in the opposite direction. This leads to differences in perception about status, even when two items are ranked equally. People, products and institutions are judged as higher-status if they are on the way up, as opposed to moving down, the ranking.

Furthermore, the momentum effect washes downstream impacting on other behaviours related to status. Individuals were asked how a university should set its tuition fees given its movement in a ranking of universities. When the university has risen in the ranking previously, the tendency was to increase fees. For universities on the wane a decrease in fees was recommended.

The price we are willing to pay for goods and services is also influenced by perceptions of status. People would pay more for a watch that is winding its way up the watch hierarchy, than one winding down — even though both were currently ranked equally. And then there’s influence. We are more willing to take advice from someone with improving fortunes.

The study suggests that you can set yourself apart from other individuals and organisations with a notionally equivalent status — and promote desirable behaviours — providing you are on the way up, or your competitors on the way down. Presumably, this advantage could also be obtained by creating a perception of ascent, or that competitors are slipping.

There was one other finding of note, too. Don’t trust organisations to recognise their own reversal of fortunes, and take action to arrest such a slide. The researchers found that while willing to ascribe lower status to other individuals demoted through the rankings, participants were blind to any similar loss of status should they suffer the same fate.

This is an executive summary of the latest academic research by Nathan C Pettit, Niro Sivanathan, Eric Gladstone and Jennifer Carson Marr. 'Rising Stars and Sinking Ships: Consequences of Status Momentum.' Pyschological Science.