With news that Cam­bridge Uni­ver­sity is to demand A* grades at A-Level as a pre­req­ui­site for entry (a grade that cur­rently doesn’t exist), there is much in the news about ‘grade inflation’.

How­ever “grade infla­tion” is actu­ally the answer; the prob­lem is “grade dis­tor­tion”:

True grade infla­tion would mean each grade was equally deval­ued, with A grades super­seded by AA, AAA and AAAA as new labels for superla­tive per­for­mance became nec­es­sary. One hun­dred per cent would become 110 per cent.

Yet exam­in­ers are reluc­tant to award 110 per cent and there are no AAAA grades. What we see is not infla­tion but a clas­sic price dis­tor­tion. Even­tu­ally all stu­dents will get A grades and they will be mean­ing­less. A* grades are a small, belated step in the right direction.

Grade dis­tor­tion is a seri­ous affair. Stu­dents and their teach­ers are forced to switch to grey mar­ket trans­ac­tions denom­i­nated in alter­na­tive cur­ren­cies: the let­ter of rec­om­men­da­tion, for exam­ple. Like most alter­na­tive cur­ren­cies, these are a hassle.

Grade dis­tor­tions, like price dis­tor­tions, destroy infor­ma­tion and oblige peo­ple to look in strange places for some sig­nal amid the noise. Stu­dents are judged not on their strongest sub­jects – A grade, of course – but on whether they also picked up A grades in their weak­est. When excel­lence can­not be dis­played, plau­dits go instead to those who deliver pat answers with­out stumbling.