Does Statistical Discrimination Explain Grading Bias? Evidence from a Natural Experiment

Statistical discrimination theory suggests that discrimination arises when gatekeepers lack individual-level information and therefore draw on their knowledge on the group-level. According to this perspective, the policy solution is straight forward: provide gatekeepers with accurate individual-level information and discrimination will cease. Grades are important signals to students about academic ability and influence future educational choices. Previous studies find that teachers exhibit negative grading bias against boys, racialized minority students, and low-SES students so these groups receive signals about lower academic potential than merited. In this study, we test whether grading bias stems from statistical discrimination. First, we leverage a natural experiment in which teachers were given information from standardized tests and see whether this change mitigates grading bias. We further test this mechanism by analyzing the role of the performance of a given social background group at the same school the year prior. We find substantial grading bias but conclude that statistical discrimination is not likely to play a major role.