The UT administration recently announced a new emergency pass/fail policy, in which a student may take up to three classes on a pass/fail basis, regardless of whether the class is a degree requirement. On the national scale, Joe Biden has announced a plan to cancel large amounts of student debt. While these two policies may seem different, they represent different applications of the same principle and tap into an age-old debate about fairness.

Take the pass/fail policy for example. Is it fair to students? Its proponents would say that it is. After all, the pandemic has been a time of unprecedented change and has created new challenges for students. Whether it be the adjustment to subpar online classes, a reduction in access to college resources (good luck trying to get help from a professor when your only way to see them outside class is a Zoom office hour), or dealing with non-academic problems related to the pandemic, students have had to work harder than in past semesters. That is, a student who might have made an A by studying three hours a week for a class in the fall of 2019 might only make a B with that same amount of effort now. This new demand on the student’s time and energy seems extremely unfair. Thus, the thinking goes, we should give everyone a “mulligan” in three of their classes, that is, allow them to have the credit for the class without it affecting their GPA. At first, this seems quite fair indeed.

Yet, not everyone is in this boat. Many people responded to the increased difficulty of the COVID era with a corresponding increase in determination. This is not to say that everyone who worked hard succeeded in their classes nor to overlook that COVID-related circumstances made success nearly impossible for some students. However, despite these cases, the fact remains that some students simply worked harder than others, and this will naturally be reflected in their grades. If one student puts in the extra work necessary to get an A in a class, and another gets a B, but uses the pass/fail option to discount the class and achieve a GPA equal to that of the A student, then how is that fair to the student who put in more effort?

Some might ask why this unfairness should matter, since a student raising their GPA via a COVID pass/fail does not directly affect those who don’t need it. The problem with this argument is that GPA points have no inherent value, but are valuable only insofar as people respect their value. They are, in short, a fiat currency. This means that any policy that raises the total number of GPA points, which, in turn, leads to grade inflation. The more GPA points are in circulation, the less valuable they are, because having a high GPA becomes less of a competitive advantage when applying for grad school or jobs. To see this in practice, take two students, one with a 4.0 GPA and another with a 2.0 GPA, and suppose the latter uses a COVID pass/fail to boost their GPA to a 3.0. Thus, the total amount of GPA points has gone up by 14%, which means that, with the extra points in circulation, someone with a nominal GPA of 4.0 would have a real GPA, in pre-inflation terms, of about 3.4. That is, someone with a 4.0 GPA after the inflation would have the same competitive advantage as someone with a 3.4 GPA before the inflation. (The math for calculating this is explained here) Since COVID pass/fails will, by design, lead to grade inflation, they will have the effect of decreasing the real GPA of students who either have high GPAs or did not need to make use of the pass/fail options. 

Here, we see two plausible perceptions of fairness. One looks at disparate circumstances and outcomes and concludes, not unreasonably, that this is not fair. The other looks at the policy, and how it completely erases the work of other students, and also reasonably concludes that this policy is unfair. 

A similar dynamic can be seen in the ongoing student loan debate. For background, about half a century ago, economists and policy analysts noticed something interesting. As the federal government increased higher education subsidies, especially through student loans, college became more expensive, and students became more indebted. The reasons for this make for interesting economics, but suffice it to say that the government could not be bothered to do anything about it and continued to manufacture a student loan crisis while enriching college administrators (UT’s President has a salary of $1,250,000) and student lenders. The upshot is that Americans owe about $1,500,000,000,000 (that’s 1.5 trillion dollars!) in student debt, largely as a result of bad government policy. I say this to emphasize that the student loan crisis is, to a large extent, the result of systematic factors, and not merely poor individual choices. 

It is not surprising, given the size of the student debt crisis, that some politicians have called on forgiving student debt. But despite the majority public approval for debt cancellation, this debt is not evenly distributed. Almost half of graduates have no student debt at all, and three quarters have less than $30,000. It is a small minority of students who have taken on a large part of the debt, and these students, incidentally, tend to be from the upper economic strata of society. 

Sometimes, those who graduate debt-free do so as a function of having parents wealthy enough to pay their way through college, but often it is the result of the frugality of the students themselves. Some students went to a cheaper school, or worked hard to receive scholarships, or served in the military, or worked jobs through school, or used any number of other ways to minimize their student debt. Any bailout for those with heavy student loan debt would be unfair to those that sacrificed so that they wouldn’t need one. 

A telling example of this is a viral confrontation between then Presidential candidate Elizebeth Warren and a man who had worked two jobs to put his daughter through college. How was it fair, he argued, that her debt forgiveness plan gave people like him nothing while giving a friend of his, who made more money than him but had bought a new car instead of saving for his children’s college, relief from student loans. He became understandably frustrated, declaring that the policy would “screw (him) over.” And polling shows that he is not alone. Any student loan forgiveness program would be seen by many Americans as unfair, particularly by those who worked hard to ensure that they would not have student loans, or who have already worked hard to pay them off. 

No one, perhaps, understood the tension between these two types of fairness than the German philosopher Friedrich Nietzsche. He argued that, in society, there are naturally going to be some people (if only through luck) who are more intelligent, more effective, and more hard-working than average, and that there are also people who will have less of these qualities than average. He argued that many of our disagreements on morality, including the two types of fairness discussed above, stem from these differences in our abilities. People who are doing better in life tend to prefer a morality that praises things such as bravery, industriousness, and prudence, whereas those who are doing worse in life tend to prefer a morality focused more on mercy and equality. While his conclusions from this fact would strike a modern ear as elitist and cruel, his explanation of our different ideas of fairness helps explain modern politics. 

The political problem of reconciling these two ideas of fairness is that both conceptions of fairness are valid. On the one hand, any system of fairness that gives people anything other than what they worked for strikes us as monstrous, but on the other hand, life is by no means an equal playing field, and a conception of fairness which completely ignores that fact would also be unacceptable. We are in a policy dilemma, for whatever we do, we are unjust to someone. If we give people mulligans on their classwork this semester or forgive student loan debt, we spit in the face of people who were industrious and fiscally responsible. If we don’t give people grace or forgive student debt, then we spit in the face of people who have had their lives upended by COVID or who, at the age of 18, were compelled to make a bad choice that they did not understand.

Now, moral philosophers will debate these two conceptions of fairness until the end of time, but for policymakers, the decision is simpler. Perhaps the most basic rule of policymaking is that incentives matter. They matter quite a bit. And policies based on the two types of fairness produce radically different incentives and radically different results. If you have a policy that is “fair,” that is, one that recognizes that people are on an uneven playing field and thus strives to achieve similar outcomes, then you remove much of the incentives to try hard. On the other hand, if you have a policy that is “fair” in that it doesn’t compensate for your starting point, but merely measures how hard you work or how well you do, then you will incentivize people to work much harder to avoid being left out in the cold. Obviously, one tends to produce better policy outcomes than the other. 

This is borne out by both of the scenarios discussed above. What are the effects of the pass/fail policy likely to be? Well, what behavior does it incentivize? While the policy is too late to affect first-semester behavior, in the second semester people will change their behavior to adjust to the policy. The optimal strategy for a student who wants to maximize their GPA is to enroll in two or three difficult classes required by their major and then switch them to pass/fail, thus avoiding both the need to study as hard as they would otherwise while avoiding any negative effects to their GPA. More generally, students will be less inclined to work as hard in their classes, as there will be no grade incentive to do so. You can criticize these students for trying to game the system, but all they are doing is responding rationally to University policy. But, whatever else it may do, this policy will likely lead to reduced effort in class, and thus a decrease in learning.

As for Biden’s student debt plan, the incentives produced are far worse. Canceling student debt would benefit those who have lots of student debt, that is, people who went to college but did not save for it, at the expense of the rest of society (who will, at best, pay for it through higher taxes or, at worst, pay for it through a credit crunch caused by the loans going entirely unrepaid). So what behavior does this encourage? Well, many people will naturally assume that this forgiveness of student loans will continue in the future. After all, how is it fair that older people get their student loans paid off while the young are left with the full bill? This will encourage yet more people to take on debt, even if they could go to a cheaper college or pay for it themselves because they will believe the government will simply take care of it. This will mean more student loans are taken out by people who cannot afford them, which means that the government will either have to bail student borrowers out yet again or refuse to help a second time. Except now, of course, people will have made decisions based on the assumption that the government would pay off their loans, meaning that the crisis will likely be worse. It would be as though students were counting on COVID pass/fail for an entire semester, only for it to be revoked near the end. We have seen similar effects in finance and insurance, and some economists are suggesting we are on the verge of seeing it with higher education. 

Of course, these predictions may be wrong, but the general point still stands. Policy needs to encourage, and reward, hard work and innovation, even though this will sometimes create unfair outcomes. Societies have been destroyed by attempts to create fairness at the expense of good policy, and, if we are to avoid policy paralysis, we need to accept that sometimes there will be bad situations where no action satisfies everyone, but that we still need to move forward.

I should emphasize, however, that this is in no way an excuse for actively perpetuating injustice through policy, or even ignoring it where it is solvable. There are almost always ways if we are clever enough and have the political will to find them, to try and balance the two types of fairness. For instance, allowing students to drop classes later in the year, another part of the emergency policy, allows students who have had COVID-related misfortunes to avoid negative repercussions on their grades without creating the moral hazard discussed above. In fact, the university should have extended the deadline further to give them more time to deal with this decision. As for the student loan crisis, policymakers could satisfy both types of fairness by trying to clean up the mess that they have made of higher education, and then allow student loans to be renegotiated in bankruptcy, which, again, is both fair to student borrowers and students savvy enough to avoid borrowing. More generally, the best way to keep the two sorts of fairness from coming into conflict is to put everyone on as level of a playing field as possible early in life so that anyone who wants to work hard and be successful can do so, but that is a discussion for another day. 

But, alas, all the best policymaking in the world cannot change the fact that life is not fair. The University of Texas and Joe Biden alike ignore this truth to both their peril and ours.