Estimating the impact of relative expected grade on student evaluations of teachers

Grade inflation over the past few decades has been a concern for many universities. Course evaluation scores are known to be positively correlated with students’ expected grades, and this paper tests whether or not there is an incentive for the instructor to “buy” higher evaluation scores by inflating grades. To test this hypothesis, I use unique data from the University of Washington's Office of Educational Assessment that includes a measure of each student's relative expected grade in the course. I find that there is an incentive for instructors to grade leniently after accounting for the potential endogeneity of the relative expected grade variable due to unobserved teacher productivity and unobserved heterogeneity of instructors and departments. Instructor fixed effects account for a significant part of the measured effect of relative expected grade on evaluations, and by not including them, the estimated impact of relative expected grade on evaluations is biased upwards.