A conflict exists between the incentives offered to students and the institutional goal of increased science and math education. Students make their course choices in response to a powerful set of incentives: grades. These incentives have been systematically distorted by the grade inflation of the past 25 years. As a consequence of inflation, many universities have split into high- and low-grading departments. Economics, along with Chemistry and Math, tends to be low-grading. Art, English, Philosophy, Psychology, and Political Science tend to be high-grading. This paper presents evidence from nine colleges and universities that grade inflation has led to a divergence among departments in grading policies. We then discuss the results of an econometric study we conducted at Williams College of the influence of grading policies on course choice. The impact that differences in grading policies across departments have on the distribution of enrollments was also estimated, and policy implications of the findings are discussed.

This Working Paper should not be reported as representing the views of the IMF.

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