The Deleterious Effects of Inflation

Economists have long known that inflation is harmful. Christopher Drew's NYTimes article shows a new arena in which inflation is stunting growth.

The latest research also suggests that there could be more subtle problems at work [in creating the 40% drop out rate in science, technology, engineering, and math majors], like the proliferation of grade inflation in the humanities and social sciences, which provides another incentive for students to leave STEM majors. It is no surprise that grades are lower in math and science, where the answers are clear-cut and there are no bonus points for flair. Professors also say they are strict because science and engineering courses build on one another, and a student who fails to absorb the key lessons in one class will flounder in the next.

After studying nearly a decade of transcripts at one college, Kevin Rask, a professor at Wake Forest University, concluded last year that the grades in the introductory math and science classes were among the lowest on campus. The chemistry department gave the lowest grades over all, averaging 2.78 out of 4, followed by mathematics at 2.90. Education, language and English courses had the highest averages, ranging from 3.33 to 3.36.

Ben Ost, a doctoral student at Cornell, found in a similar study that STEM students are both “pulled away” by high grades in their courses in other fields and “pushed out” by lower grades in their majors.

At the elite college where I teach, grades for our Principles of Economics class are strictly curved - the median must be a B or B+, guaranteeing that a lot of freshmen who never got less than an A- in high school are going to be staring a "C" in the eyes next month. But that's a gatekeeper class: only the top half are allowed to major in economics, and after Principles, the grading becomes lax. Students expect A's and B's; employers have come to expect that all decent students average at least a 3.0.

One of my students, discussing her C average in Principles, asked if she should leave economics. One of her friends - a senior - regrets studying economics: "If I had majored in Psychology, I would have gotten A's and been able to get into a better M.B.A. program".

Professors know that tough grades lead to worse "teaching evaluations" by consumer-minded students. Students know that many employers use a fixed GPA cutoff as a filter to cull the hundreds of applications they get for coveted entry-level jobs. The equilibrium in this game is grade inflation, where A is the new B, and A- is the new C. And it's not as though the elite institutions are holding the line: at Harvard, the modal grade is an A.

The solution to grade inflation is for leading schools - the top liberal arts or research universities would be a natural starting place - to agree to a school-wide grading scheme. It's probably too demanding to say that every class must have the same average grade, but perhaps each major or department could be required to run the same average each semester, with some classes having lower and others higher averages, but none outside some set range.

In order to ease the transition, it might be wise to leave the old A-B-C-D-F system, with its awkward weighting (an "A" is worth four "C's"!). Switching to a ten- or one hundred-point scale, with a fixed average at 5 or 50 would allow equal room at the top and bottom of the scale, and recognize that student outcomes are normally distributed. It would also tell employers and grad school, "I come from a school with a fixed-median grading system. You can trust this GPA."