In a previous post we looked at how standardized test scores influence long-term earnings by affecting what types of colleges students attend.
In this post we want to answer a slightly different question: to what extent do grades impact earnings when holding post-secondary attainment constant? For example, do Bachelor degree holders with different high school GPAs end up with different incomes? If so, how much? The short answer is yes, and quite a bit. For more details, keep reading!
To answer this question, we’ll use data from the Washington State Education and Research Data Center (ERDC), where they track long-term earnings of Washington high school graduates. Their data is disaggregated in many interesting ways, one of which is by GPA: earnings are broken out for high GPA students (3.0 and above) and low GPA students (less than 3.0).
For this analysis, we’ll look at the ratio of the earnings between these two groups: the income of high GPA students divided by the income of low GPA students. We’ll also disaggregate the results by post-secondary attainment and the amount of time after graduation, both of which have big impacts on earnings. The results are show below.
To highlight the long-term behavior, we’ve made a table that shows the average ratio for 8+ years after graduation. We can see that high GPA students make between 5% and 16% more than their lower GPA peers, and the ratio steadily increases as educational attainment increases. This leads to very large differences in lifetime earnings (LTE) for more advanced advanced degrees.
Finally, we should note that we are not directly measuring the casual GPA effect on income. For example, things like student motivation may impact both GPA and adult income and thus be responsible for some fraction of the effect that we see. In this sense, we are probably measuring the upper bounds of the effect of GPA itself on income. In other words, an intervention that directly increased GPA would probably have a somewhat smaller effect on income than we see here.
At this point it is worth putting these ratios in perspective.
We previously looked at how standardized test scores predict earnings differences via changes in college enrollment patterns: it turns out those with higher test scores tend to get more advanced degrees, and this “degree sorting” increases their LTE by ~12% when going from “not proficient” to “proficient” on the Washington state standardized tests. In our current case, we are looking are students with the same degrees, and finding that going from the low GPA to high GPA category within the same degree also significantly increases earnings.
These two effects will be additive: students that are better academically prepared will both
- earn more by tending to get more advanced, high-paying degrees
- earn more within each degree category
Unfortunately, we can’t do a direct quantitative comparison between these two effects since our GPA data is distinct from our standardized test score data, and we currently don’t have a way to directly link the two datasets. This bring us to our final point:
Each of these effects in isolation are quite large, and so it is clear that increasing academic preparedness of K-12 students will generally have very large and meaningful impacts on their long-term economic outcomes.