Jeffrey T. Denning∗ Rachel Nesbit† Nolan Pope‡ Merrill Warnick:
Average grades continue to rise in the United States, prompting discussion about the pos-sibility of grade inflation. However, we know very little about the consequences of gradingstandards for students. We study how grade inflating teachers affect students. First, we extend,develop, and validate teacher-level measures of grade inflation. We construct two measures ofgrade inflation, one that measures average grade inflation and another that measures whetherteachers are more likely to give a passing grade. These measures pass forecast bias tests com-mon in the teacher effects literature. We show that grade inflation is distinct from teachervalue-added, with grade inflating teachers having moderately lower cognitive value-added andslightly higher noncognitive value-added. Next, we consider the effects of grade inflation onfuture outcomes. Passing grade inflation reduces the likelihood of being held back, increaseshigh school graduation, and increases initial enrollment in two-year colleges. Mean gradeinflation reduces future test scores, reduces the likelihood of graduating from high school,reduces college enrollment, and ultimately reduces earnings.
Next, we consider the effects of grade inflation on future outcomes. Passing grade inflation reduces the likelihood of being held back, increases high school graduation, and increases initial enrollment in two-year colleges. Mean grade inflation reduces future test scores, reduces the likelihood of graduating from high school, reduces college enrollment, and ultimately reduces earnings.
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