How robust is the rationality assumption in economics? A statistical test based on student grade distributions

Abstract

This note re-addresses the question of the rationality of economic actors in a new setting. We examine the distribution of final course grades for a “Principles of Economics Class” in an effort to draw conclusions about rational student work effort. Based on the concepts of the opportunity cost of time, the relative reward for earning various grades (based on university codes for determining grade points) and the concept of rationality, we expect to find a greater percentage of grades at the lower end of the distribution for each grade level. We find statistical evidence that there are more students at the lower end of each grade interval than at the upper end. This result is consistent with what economists have long conjectured: students are rational in the allocation of study time.

Acknowledgements

The authors thank an anonymous referee for helpful comments.