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The Simple Economics of Thresholds: Grades as Incentives

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  • Darren Grant

    () (Department of Economics and International Business, Sam Houston State University)

  • William B. Green

    () (Department of Economics and International Business, Sam Houston State University)

Abstract

This paper examines how grade incentives affect student learning across a variety of courses at two universities, using for identification the discrete rewards offered by the standard A-F letter grade system. We develop five predictions about effort provision in the presence of the thresholds that separate these discrete rewards, only one of which has been previously tested in the economics literature generally. Surprisingly, all are rejected in our data. Either these grade incentives do not influence student effort appreciably on the margin, or the additional effort is ineffective.

Suggested Citation

  • Darren Grant & William B. Green, 2009. "The Simple Economics of Thresholds: Grades as Incentives," Working Papers 0901, Sam Houston State University, Department of Economics and International Business.
  • Handle: RePEc:shs:wpaper:0901
    as

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    File URL: http://www.shsu.edu/academics/economics-and-international-business/documents/wp_series/wp09-01_paper.pdf
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    References listed on IDEAS

    as
    1. Joseph G. Altonji & Prashant Bharadwaj & Fabian Lange, 2012. "Changes in the Characteristics of American Youth: Implications for Adult Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 30(4), pages 783-828.
    2. Pascal Courty & Gerald Marschke, 2004. "An Empirical Investigation of Gaming Responses to Explicit Performance Incentives," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 23-56, January.
    3. Stinebrickner Ralph & Stinebrickner Todd R., 2008. "The Causal Effect of Studying on Academic Performance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-55, June.
    4. Reback, Randall, 2008. "Teaching to the rating: School accountability and the distribution of student achievement," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1394-1415, June.
    5. Gerald S. Oettinger, 2002. "The Effect Of Nonlinear Incentives On Performance: Evidence From "Econ 101"," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 509-517, August.
    6. Darren Grant, 2010. "Dead On Arrival: Zero Tolerance Laws Don'T Work," Economic Inquiry, Western Economic Association International, vol. 48(3), pages 756-770, July.
    7. Charles Perrings & David Pearce, 1994. "Threshold effects and incentives for the conservation of biodiversity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(1), pages 13-28, February.
    8. Muradian, Roldan, 2001. "Ecological thresholds: a survey," Ecological Economics, Elsevier, vol. 38(1), pages 7-24, July.
    9. Richard Borghesi, 2008. "Widespread Corruption in Sports Gambling: Fact Or Fiction," Southern Economic Journal, Southern Economic Association, vol. 74(4), pages 1063-1069, April.
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