Grade Divergence as a Market Outcome

Abstract

Grade point averages (GPAs) for college courses have been increasing at least since the 1960s (Kolevzon 1981). Grade inflation has been the subject of a considerable literature investigating the causes (McKenzie 1975; Kolevzon 1981; Dickson 1984), consequences (Millman et al. 1983; Sabot and WakemanLinn 1991; Shea 1994), and suggested remedies (Zangenehzadeh 1988). Perhaps less well documented is that grade inflation has occurred at different rates across university departments, causing average GPAs to diverge across disciplines. In particular, grades in the sciences, including economics, tend to be lower than grades in the humanities and in pre-professional fields (Shea 1994; Becker 1997). Sabot and Wakeman-Linn (1991) documented the division of colleges into highand low-grading departments as a byproduct of their work on grade inflation. They found that this division is affecting enrollment patterns, with students abandoning "harder" or low-grading disciplines like math or science in favor of "softer" or high-grading disciplines. Thus, grade divergence may be exacerbating the shortage of technically qualified graduates by skewing enrollment away from science and engineering. Similarly, the recent decline in economics majors may reflect student aversion to tougher grading practices in economics relative to other disciplines (Becker 1997). I offer an economic explanation for grade divergence. My hypothesis is that, given equal money prices per credit hour across disciplines, departments manage their enrollments by "pricing" their courses with grading standards commensurate with the market benefits of their courses, as measured by expected incomes.I analyzed grade divergence using a cross-section of 59 fields of study from a recently published survey of college graduates by the National Center for Education Statistics, A Descriptive Summary of 1992-93 Bachelor's Degree Recipients: 1 year later (NCES 1996). The survey tracks 1992-93 college graduates to determine outcomes from postsecondary education, including returns to investment in education. Using this sample, I found evidence consistent with the economic explanation of grade divergence: Graduates from high-grading fields of study have lower earnings than graduates from low-grad-