The Impact of Letter Grades on Student Course Selection and Major Choice: Evidence from a Regression-Discontinuity Design

This research examines the effect of undergraduate course letter grades on future course selection and major choice. Using a Regression-Discontinuity design, we exploit the fact that the probability of earning a particular letter grade jumps discontinuously around letter grade cutoffs. This variation in letter grades allows us to isolate the impact of letter grades on major choice and course selection. We collect original numerical scores for 65 introductory courses across 6 fields and merge this with administrative data including student-level characteristics and transcripts. Since grading cutoffs exist throughout the distribution of scores, we are able to estimate local treatment effects at a variety of localities to examine the distribution of treatment effects. Contrary to the findings of the previous literature, we find no evidence that students respond to their letter grades in terms of course or major choices. ∗Visiting Assistant Professor, School of Engineering Education, Purdue University †Assistant Professor of Economics, University of Illinois at Chicago