Grade inflation at Yale is a sensitive topic–The administration doesn’t even like to call the issue grade inflation but instead refers to the problem as grade compression. The feeling is not that grades are (necessarily) too high, but that with so many A’s and A-‘a being handed out, it’s very hard to distinguish the good students and the great students. Is this really true? And is grade inflation itself a real problem? And if there is a problem with grade distributions, how should we fix it? I don’t have answers, but I do have opinions.

First off, many people complaining about grade inflation seem to believe students today don’t “deserve” so many A’s. I think that’s dumb. The main purpose of class grades is to help employers and graduate schools distinguish between students graduating at the same time from the same university. Even with Yale’s high mean grades right now, I believe there is still enough variation in the distribution to be able to do this. Grade inflation is a problem if everyone is getting A’s, but as long as you have three grade categories (e.g., A, A-, and B+) you can distinguish the excellent from the good and the good from the poor in a single graduating class.

As fun as it would be to be able to use grades to compare students from different generations, it’s not terribly useful. By the time you are five years out of college, employers have far better direct information on workplace performance than your GPA. To put this in baseball terms, debating whether Miguel Cabrera is better than Joe Dimaggio is entertaining, but knowing the answer won’t help the Tigers compete for the World Series next year. They need to assess performance of players available today.

Grades shouldn’t be used to compare individuals across universities either–institutional standards have been different for a long time. My alma mater held grades to a B- average when I was in college and that was a lot lower than its peers. It wasn’t a problem because employers knew this and took it into account when hiring new college graduates. Plenty of my friends with seemingly low GPA’s had little trouble finding jobs.

Unfortunately, there is a fair bit of evidence that employers and graduate schools do compare GPA’s across universities without taking proper account of the institutions’ different grade distributions. This argues that grade inflation at Yale is actually a good thing for its own undergraduates. Of course, if we want to live in a more meritocratic society (where the best students get the best jobs), it’s not fair that students at grade-inflated universities get the best jobs.

Implementing a solution is going to be difficult, because we’re stuck in a prisoner’s dilemma–all the elite universities have an incentive to ignore their own grade inflation because it benefits them individually. There needs to be collective action (cooperation!) between schools on an issue that is prickly enough at the individual university level.

Alternatively, it might be easier for the consumers of grades to solve this problem by demanding class ranks and ignoring GPA’s all together when comparing candidates from different universities. That is, admissions committees and employers need to smarten up. In a perfect market, economic theory predicts that the firms and schools that do this will get better candidates and drive the firms and schools that don’t out of business. This is the same theory that says discrimination on the basis of sex and race should naturally disappear from the market. Now that I think about it, we might be living with the negative consequences of grade inflation for a while.

Update: I’ve written up a couple more thoughts on grade inflation.