A grade slightly higher than a C+ was typical in 1960. By 2006, the grade point average at private and public schools had climbed to a B and beyond. Below you can see that as of 2013, the inflationary trend continued:

According to the NY Times (2/9/14), grades are even more elevated at the “Ivies”:
- At Princeton, 42% of all grades are A’s.
- At Yale, 62% of all grades are A’s.
- At Harvard, more than 50% of all grades are A’s.
Where are we going? To the causes and consequences of grade inflation.
The Wellesley Deflation Experiment
During 2004, the administration and staff at Wellesley College decided to do something about grade inflation and compression. In the humanities and social sciences (except economics), too many students were getting the same high grades. Below you can see where those high grades were concentrated:

Their solution was an average grade cap of B+ for classes with 10 or more students. If an instructor wanted a higher average, he or she needed administration approval.
The results?
For students, course selection changed. No longer having that “guaranteed A” created the incentive to take the “untreated” disciplines like economics where sign-ups increased. We can also assume that more realistic grading provided students with a better indication of their academic strengths and weaknesses. However, at graduation the number of scholars getting the highest honors declined.
Meanwhile on the faculty side instructor evaluations changed. Whereas before the new policy, those teachers who gave high grades consistently got glowing online assessments from students…no more. In addition, the popularity of department majors even changed with people shifting away from those disciplines that had been the source of all of those A’s.
Finally, we have the issue of “unilateral disarmament.” After all, will employers and graduate schools remember Wellesley’s grade deflation policy when they consider applicants? Quite aware of the problem, Princeton abandoned its attack on grade inflation after a brief experiment. (Indicated by a 2015 NY Times letter, the grade cap remains at Wellesley.)
Our Bottom Line: Incentives
We could say that a grade is like a price. Both convey information and create incentives. As a result, when either inflates, the information and incentives change.
And once those incentives change, for prices and grades it is really tough to pop the bubble.