A Model of Declining Standards
UCSD Economics Discussion Paper 97-18
16 Pages Posted: 22 Sep 1997
Date Written: July 1997
I present a model in which relative standing determines the level of achievement needed to pass a test. A candidate passes a test (or gains the credential) provided that his performance compares favorably to people who have passed the test recently. I argue that standards are likely to decline under such a system. There are three kinds of agents in the model. Candidates wish to pass a test, obtain a promotion, or gain a credential. Members of the elite are people who have already passed the test. The judge decides who passes. In order to pass, a candidate's performance must be at least as good as the performance of a representative member of the elite. Candidates choose the least expensive effort level that will enable them to pass. Without perturbations in the underlying data (in this case, the preferences of the judge), the model predicts that standards will not change. Perturbations in the preferences used to judge candidates systematically lead to a reduction in standards.
JEL Classification: D81, D82, D83
Suggested Citation: Suggested Citation