Harvard’s New Grading Cap: Addressing Grade Inflation

By Jason Furman and David Laibson

In a significant move, the Harvard faculty has implemented a new policy to limit full A grades in courses. This change follows lengthy discussions and introduces a ’20 plus four’ formula, which restricts full A’s to about 20 percent of students in a course. An additional allowance for four students exists to accommodate small, advanced seminars that often require collaboration.

Implementing this new rule is just the beginning. The ultimate challenge lies in ensuring that these changes enhance the quality of education, which requires efforts beyond campus policies.

Easy A grades have multiple drawbacks. They reduce the motivation to learn, leaving students with less knowledge and fewer skills upon graduation. Moreover, inflated grades make it difficult for exceptional students to stand out. Although high grades may seem to relieve student stress, the reality at Harvard saw GPA thresholds soar. Recently, merely two A-minuses barred students from graduating summa cum laude.

During the seven years we have taught EC 10, Harvard’s introductory economics class, over 4,000 students, or 49 percent, received full A’s. This percentage is below the overall average, where instructors awarded full A’s 60 percent of the time in the 2024-2025 academic year. While all top EC 10 students mastered the material, they did not all reach the ‘extraordinary distinction’ standard a full A should represent.

Like many educators, we aspired to stricter grading but feared it might negatively impact our students or deter them from pursuing economics. This situation reflects a classic collective-action problem we discuss in EC 10. Though society benefits from collective action, individuals often prioritize personal gain. This behavior contributes to issues such as depleted fisheries, overgrazed public land, and polluted rivers. Grade inflation is similar, with junior faculty especially concerned that honest grading might lead to poor evaluations, lower class enrollments, and reduced chances for tenure. This fear promotes ever-increasing grades, or inflation.

Despite various deans urging faculty to reduce A grades, change was minimal until a collective decision was made. When personal incentives contradict societal benefits, the solution involves mechanisms that encourage or mandate actions beneficial to the collective. This is another topic we cover in EC 10.