The NYT has a piece on grade inflation that rather misses the point. It really does not matter what the labels are, whether they are five different kinds of A, A through F, or X, Y and Z. What matters is how well the information get conveyed. While there is a fair amount of work showing mean grades increase over time, what I am not aware of is much if any work showing that the information content of the grades has decreased over time. If everyone is playing along at home, so to speak, so that employers realize that when Bush and Gore got their C's at Yale those represented something very different than a C would today, then so what?
More broadly, the use of information such as grades, test scores, major and so on by workers and employers in the labor market has always seemed to me relatively under-studied in economics. John Bishop at Cornell has some good stuff, but there is not much else.
It's really quite easy.
1 year ago