The Effects of Dropping a Grade in Intermediate Macroeconomics

When preparing a course at the start of a semester, instructors must consider how students will be assessed. One commonly used approach is to allow students to drop their lowest grade on an assignment or test. However, the effect of this policy is debatable.This study adapts the model used by Sewell (2004) to investigate student performance in Intermediate Macroeconomics over six semesters at a public Midwestern university. Allowing students to drop their lowest test score does not appear to artificially inflate their final grade in class. Performance in previous economics courses, overall GPA and class status are strong predictors of the final grade.This grading approach does lead to strategic test-taking on the part of students. Some choose not to take an optional end-of-semester exam that can potentially raise their final grade. Probit analysis shows this decision is positively related to the student’s score going in to the exam, their concurrent course load and the variance in their prior test performance. Surprisingly, it is not related to the minimum score needed to raise their final grade.