Increased Learning or GPA Inflation? Evidence from GPA-Based University Admission in Chile. CEPA Working Paper No. 18-07

A student's ranking in the grade point average (GPA) distribution has emerged as an admission variable that increases admission rates of both segregated minorities and high-performance individuals. In 2012, Chile's centralized university admission system introduced a GPA ranking variable relative to the previous cohorts' average GPA. Such a system introduces academic incentives to exert effort, but also to inflate GPA. In this paper, we analyze the effects of that reform on the GPA distribution and achievement measures. Our results, based on difference-in-differences and simulated instruments methods, suggest that: (i) GPA increased across the entire distribution, independently of the incentive structure; and (ii) GPA increases were unrelated to improvements in achievement. We interpret the results as evidence that the introduction of the new variable caused GPA inflation rather than increased learning.