The View from 30,000 Feet: How Grade Inflation Lowers College Enrollment and Graduation, as well as Employment and Earnings

[The View from 30,000 Feet is an occasional entry that offers a big-picture view of some of the topics covered on this blog.]

Average college grades have risen substantially over the past several years. Although such a trend might reflect real improvements in student learning, the fact that standardized test scores have not increased at the same rate suggests that the rise in average grades likely reflects a shift toward lower grading standards. Understanding how grading standards impact students– both in their academic performance and in their subsequent educational and professional outcomes – constitutes the central question addressed in new research by a team of scholars from the University of Texas, the RAND Corporation, the University of Maryland and the University of Georgia. This team studied the effects of grade inflation on high school students by constructing two teacher-specific measures of grade inflation. The first is “mean grade inflation,” which they explain measures how much higher, on average, grades are than expected, given student standardized test scores and other characteristics. The second is a novel measure, which the researchers refer to as “passing grade inflation,” which measures inflation at the margin of passing a class – that is, inflating the student’s grade from an F to a D or above. The researchers first find that these two measures of grading leniency are correlated, but distinct, and highlight the tension between higher grading standards either improving student performance by eliciting more effort or hampering performance by discouraging students.

To study the effects of grade inflation the authors use administrative data on students and teachers from the nation’s second-largest school district, Los Angeles Unified School District, as well as administrative data on students in the universe of public high schools in Maryland linked to administrative college and earnings records. Analysis of these data reveals that exposure to higher mean-grade-inflating teachers reduces enrollment in postsecondary education programs, particularly associate’s degrees, and also reduces graduation from associate’s degree programs. Additionally, the authors find that mean grade inflation reduces both the likelihood that a student will be employed up to six years after expected high school graduation and their earnings up to seven years after expected high school graduation. On the other hand, passing grade inflation increases enrollment in associate’s programs after high school graduation, but reduces graduation from bachelor’s programs.