Surely any teacher would be offended by the signaling theory of education. If people who go to school don’t come out any better, what does that imply about teachers? The theory seems to suggest that their only function is to make it costly for low ability students to go to school. I believe that most teachers strive quite the opposite. They would want to see improvements especially among the low ability students.
So why do schools assign grades to students? Grading serves as a mechanism to distinguish high ability students from low ability ones, so that the school can reward the high grade students and/or punish the low grade students psychologically, financially, or even physically.
If a school’s interest is to improve students’ abilities rather than to make itself a signaling mechanism, then it should abandon the grading system altogether. One could argue that grades can be used as incentives for students to work harder, but if this were to be true, then grades need to be based on marginal improvement. In reality, grades are based on comparison with others’ performances rather than with one’s own past performance. There is reasons to think that this form of grading can provide disincentives to put effort for low ability students.
By signaling mechanisms, schools that are harsher to low ability students are more popular, since attending such schools signal that students have high ability. If a grade-free school was introduced, such school would be less costly for low ability students, attendance to such schools will give bad signals, and thus the school will be driven out of the market.
What should we do, then? Make a collective effort to make schools grade-free. Schools, with the aim of improving students' abilities, can function without giving grades. On the other hand, grading system leads to early sorting processes potentially resulting in discrimination against low-income students (holding abilities constant, students from high-income families can more easily earn higher grade, earning potentially life-long advantage through signaling). Further, valuable resources are being wasted on grading in the sense that those resources can be put into better improving students’ abilities. Students want teachers, not graders.
