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REAL COSTS OF NOMINAL GRADE INFLATION? NEW EVIDENCE FROM STUDENT COURSE EVALUATIONS

Authors

  • PHILIP BABCOCK

    1. Babcock: Assistant Professor, Department of Economics, University of California, Santa Barbara, CA. Phone 1-805-893-4823, Fax 1-805-893-8830, E-mail babcock@econ.ucsb.edu.
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      This work benefited from interactions with and comments from Kate Antonovics, Kelly Bedard, Roger Gordon, Peter Kuhn, Mindy Marks, Garey Ramey, Valerie Ramey, and Michelle White. The author thanks April Burcham and Jeremiah Schwab for facilitating access to the UCSD CAPE data.


Abstract

College grade point averages in the United States rose substantially between the 1960s and the 2000s. Over the same period, study time declined by almost a half. This paper uses a 12-quarter panel of course evaluations from the University of California, San Diego to discern whether a link between grades and effort investment holds up in a micro setting. Results indicate that average study time would be about 50% lower in a class in which the average expected grade was an “A” than in the same course taught by the same instructor in which students expected a “C.” Simultaneity suggests estimates are biased toward 0. Findings do not appear to be driven primarily by the individual student's expected grade, but by the average expected grade of others in the class. Class-specific characteristics that generate low expected grades appear to produce higher effort choices—evidence that nominal changes in grades may lead to real changes in effort investment. (JEL I21, J22, J24)

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