Grade Bubbles

by Elaine Schwartz    •    Dec 27, 2010    •    896 Views

At the University of North Carolina (UNC), the average G.P.A. was 2.49 in 1967 and 3.21 in 2008. Are we 25% smarter?

In a 2003 Washington Post article, one of the nation’s grade inflation experts, Stuart Rojstaczer, then a Duke professor, explained his grading considerations. Realizing if he gave “the C’s some students deserve, my class will suffer from declining enrollments…low enrollments are taken as a sign of poor-quality instruction. I don’t have any interest in being known as a failure.” Consequently, his grades ranged from A to B-. They reflected the trend toward everyone getting A’s “except for the occasional self-destructive student who doesn’t hand in assignments or take exams–if exams are given.”

At UNC, concern has developed about recognizing outstanding scholarship. If everyone gets an A, then who is outstanding? The UNC solution, currently being considered by a committee, is to publish additional information such as median grades in specific courses. A controversial policy at Princeton has been to limit A’s to 35% of the student population.

At certain law schools, though, the opposite is unfolding. At Loyola Law School in L.A., all averages have moved up by .333. Starting with their fall, 2008 classes, NYU implemented a new (higher) grading curve that included an A+. “We believe that the new curve will more accurately represent the achievements of our students to the outside world.”

The Economic Lesson

As economists, the price system first comes to mind. Prices are signals that convey information. If we compare grade inflation to price inflation, we can say that high grades, when given to everyone, convey increasingly less information about student achievement. When prices convey no information, as in Zimbabwe, people turn to alternative currencies.

And yet, again, as economists, if we think of incentives, a teacher does not want to be the only one giving lower grades because of diminished enrollment. A school does not want to be the only institution giving lower grades because it might harm students’ employment opportunities.

So, as was true during pre Sherman Anti-trust Act era for corporations, should schools together agree to lower grades? But then, will we see the results of corporate collusion collapsing when firms deviate from the “rules’ that cartels try to establish?

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