Abstract
More granular grading scales provide a more accurate assessment of achievement and thus provide students with more informative feedback on their performance. Using Swedish administrative data and exploiting a natural experiment, we identify the effects of moving from a system with three passing grades to one with five passing grades. Students receiving more informative grades are less likely to graduate from high school, from academic high school tracks, and from STEM and art high school tracks. Affected students are also less likely to enrol in STEM courses at university. The evidence suggests discouragement as a likely mechanism, with students revising their self-belief downward when receiving more informative feedback.
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