Working Paper: NBER ID: w22207
Authors: Rebecca Diamond; Petra Persson
Abstract: We examine the long-term consequences of teacher discretion in grading of high-stakes tests. Bunching in Swedish math test score distributions reveal that teachers inflate students who have “a bad test day,” but do not to discriminate based on immigrant status or gender. By developing a new estimator, we show that receiving a higher grade leads to far-reaching educational and earnings benefits. Because grades do not directly raise human capital, these results emphasize that grades can signal to students and teachers within the educational system, and suggest important dynamic complementarities between students’ effort and their perception of their own ability.
Keywords: teacher discretion; grading; high-stakes tests; long-term consequences; educational outcomes
JEL Codes: I20; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher grade due to manipulation (C29) | Increased likelihood of high school graduation (I21) |
| Higher grade due to manipulation (C29) | Improved final GPA (D29) |
| Higher grade due to manipulation (C29) | Increased college enrollment (I23) |
| Higher grade due to manipulation (C29) | More years of education by age 23 (I21) |
| Higher grade due to manipulation (C29) | Increase in annual income at age 23 (J31) |
| Manipulation of test scores (C90) | Enhances future academic performance (I21) |
| Manipulation of test scores (C90) | Boosts student confidence and effort (D29) |
| Grades as signals (C29) | Dynamic complementarities between students' perceptions and educational efforts (D29) |