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There are many different measures used to determine how a student is doing academically — teacher observations, in-class assignments, quizzes and tests, report cards, benchmark exams, and standardized assessments, to name a few. But when those measures send conflicting signals, it can be unclear whether students are actually learning and prepared for the next step.
One driving factor of this disconnect is grade inflation. It is a problem that existed pre-COVID and one that could have serious long-term effects on students. When grades lose their meaning, students lose an important source of feedback. Instead of pushing themselves to improve, students may get a false sense of mastery. Or simply put in less effort. Teachers are also driven by this same dynamic. Student satisfaction, graduation rates, or administrative pressure can leave educators with built-in incentive to inflate grades.
A new working paper from the National Bureau of Economic Research, “Easy A’s, Less Pay: The Long-Term Effects of Grade Inflation,” provides some of the clearest evidence yet that this trend carries real consequences.
Rather than simply comparing high- and low-performing students, the researchers isolate the effect of grading standards by examining differences across teachers. Because students are often assigned to teachers somewhat randomly, this allows the authors to estimate how exposure to stricter or more lenient grading affects long-term outcomes.
The tradeoffs behind higher grades
Using teacher-level variation and differences in grading standards across classrooms, authors Jeffrey Denning, Rachel Nesbit, Nolan Pope, and Merrill Warnick find that grade inflation may feel beneficial in the short term, but it is associated with real costs later in life, particularly for lifetime earnings and workforce readiness.
The researchers identify two teacher-specific measures of grade inflation. The first, which they refer to as “mean grade inflation,” measures “how much higher on average grades are than expected, conditional on student standardized test scores and other characteristics.” The second, “passing grade inflation,” measures inflation “at the margin of passing a class,” such as inflating a student’s grade from an F to a D or higher.
With mean grade inflation, the researchers find that future test scores decrease, as does the probability of graduating high school, enrolling in college, or securing employment. In fact, students with teachers who are more prone to give easy A’s are predicted to earn an estimated $213,872 less than their peers.
By contrast, the researchers continue, “passing grade inflation” has more mixed effects. It “reduces the probability of being held back, increases the probability of graduating high school, and increases some postsecondary enrollment,” but the gains are largely superficial and don’t translate into stronger academic performance or higher earnings later in life.
Because teachers have a large amount of discretion over how they assign grades, exposure to different teachers will have varied effects on students, the researchers point out.
For instance, a teacher who passes most students might reduce the likelihood that a student repeats a grade or is unable to graduate due to not passing a required class. Alternatively, a teacher who gives many students A grades might reduce the incentive for top students to study, which could hurt their performance in future classes by lowering their learning or motivation.
The consequences extend beyond K-12 classrooms. Colleges and employers often rely on grades and diplomas as signals of student readiness and skills. For policymakers, school leaders, and educators, these findings raise an important question: Should the system prioritize higher completion rates, or ensure diplomas reflect meaningful levels of achievement?
How do we restore integrity to grading?
If grades are to serve their intended purpose, they need to mean something again and reflect what students actually know. Subjective or politically-driven grading practices should be returned to objective standards, and there should be greater consistency between grades and actual achievement. State and school leaders should consider how to realign incentives with student learning, ensuring that measures of student success are tied to demonstrated mastery rather than course completion alone.
While grade inflation may seem harmless (or even compassionate!) in the moment, the evidence suggests otherwise. Students will not be properly prepared for the real world if deficiencies are hidden and expectations are lowered.
As this research and other studies before it make clear, if we want students to succeed beyond the classroom, we have to be willing to tell them the truth about their academic performance while they’re still in a position to improve it.
