And from my limited experience on the hiring side, while a trusted referral is worth much more than a programming test, a good report from a potentially adversarially chosen reference is worth much, much less. It's much easier for an unscrupulous person to find a friend who's willing to inflate their achievements on the phone than to provide on-the-spot solutions to programming problems they lack the skill to solve themselves.
A good hiring manager will be able to sniff that out rather quickly. Following up on references doesn't mean calling it a day after one random phone call either.
Source: I am FAANG ATM and the new grads I work with outperform 10+ year tenured engineers at other companies I have worked at.
It is! Where I work we have a min of three references required for non-entry level jobs and it reveals quite a bit at higher levels. It does require more effort on the part of the hiring manager though and I suspect most would rather punt it off to a test than do the due diligence when it comes down to it.