You often hear that grade inflation exits in colleges today. Today’s college students receive an A− or B+ for the same work that would have earned them a C+ or C, say, 25 years ago. But I’m not sure that is a bad thing. First, it looks a lot better for students who go out into the job market to have earned higher grades than lower grades.
Employers look more favorably upon students with high grades than with low grades. Second, if college professors really wanted to end grade inflation, they could do so tomorrow. Just stop giving high grades out. It’s as simple as that. The fact that they don’t do this must mean that they prefer to give high grades to low grades.
Hear what and how the economist thinks:
The student could be wrong on two counts. First, he says that if students receive high grades like an A or B instead of a C, they will look better to employers. But this isn’t necessarily true if employers take the grade inflation into account. Consider two settings: In the first setting, the non-grade inflation setting, only 10 percent of college students have a grade point average of 3.8. In the second setting, the grade inflation setting, 32 percent of college students have a grade point average of 3.8. Now in which setting is an employer more likely to think that the grade point average is reflective of very special performance?

It is likely to be in the non-grade inflation setting in which a smaller percentage of students receive the grade point average of 3.8. Consider the following dialog between two employers: The first employer says:

“I am interviewing this college graduate today for a job. She earned a 3.8 GPA.” The second employer responds: “Almost everyone I interview these days has that GPA, it is not as uncommon as it once was. I’ve had to figure out some other way to separate the true 3.8 GPA students from those who only have a3 .8 due to grade inflation. For that reason, our company has recently started giving our interviewees a battery of tests. We want to see what they know before we hire them. In earlier years, we didn’t have to do that.”

The second thing that the student says that may not be true is that if college professors wanted to stop grade inflation, they could do so tomorrow. College professors may want to stop grade inflation, but it doesn’t necessarily follow that they will be able to stop it.

They could very well be in a prisoner’s dilemma setting. To illustrate, suppose college professors on a particular college campus enter into an agreement with other college professors on the same campus to stop inflating grades. Each professor now has the choice of holding to the agreement or breaking it, continuing to inflate grades. If a professor wants to raise the grades of his or her students relative to other students, he or she may choose to inflate grades, thinking that other professors are not inflating grades. The result? All (or almost all) professors will end up inflating grades.

Questions:

1. A student’s relative standing in a particular college class of 40 students may be the same regardless of whether there is grade inflation or not. Do you agree or disagree? Explain your answer.

2. Do you agree or disagree that a prisoner’s dilemma setting of two parties can be described as: “You do what is best for you, and I will do what is best for me, but unfortunately, the outcome will not be the best for both of us.” Explain your answer.