Degree class is used to signify the extent to which a student has mastered the curriculum studied. There has been a steady rise (of about 2% pa) in the proportion of students getting a first class degree for many years. And there is considerable unexplained variation, across subjects and institutions, in both the level of grades and their rate of inflation.
This paper relies on information provided by the labour market to understand the (financial) values of degrees. We use the LEO database to complement earlier work on the heterogeneity of the financial returns to a degree. We find large differentials in the returns to understanding the curriculum – which are strongly positively correlated with the average returns to subject. A large proportion of students fail to get good grades and end up having low financial returns to their time at university – and this is true even if they studied high return subjects. It seems that a degree is worth doing well only if its worth doing at all. This finding is consistent with a productivity interpretation of what higher education does, but not with a signalling interpretation.
Recent attention has focussed on “grade inflation” – unexplained shifting in the degree class distribution across time. This is consistent with either better teaching/learning, or with falling attainment standards required for a given degree class. We model the probability that the degree class awarded to a particular student would have been awarded if that student had been in earlier cohorts to allow us to distinguish “fake firsts” from the genuine article. We show how grade inflation fools firms into offering such fakes higher wages than they would have received, at least in the early stages of graduate work experience. And we show how this imposes a negative externality on the real deal – although firms quickly learn to tell wheat from chaff, and adjust wages accordingly.
Presented by:
Prof. Ian Walker (Lancaster University)
Date & time:
October 12, 2022 11:30 am - October 12, 2022 12:30 pm
Venue:
ISER Seminar Room
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