Does the format of assessment (proctored or un-proctored exams) affect test scores in online principles of economics classes? This study uses data from two courses of principles of economics taught by the same instructor to gain some insight into this issue. When final exam scores are regressed against human capital factors, the R-squared statistic is 61.6% for the proctored format exams while it is only 12.2% for the un-proctored format. Three other exams in the class that had the proctored final were also un-proctored and also produced lower R-squared values, averaging 30.5%. These two findings suggest that some cheating may have taken place in the un-proctored exams. Although it appears some cheating took place, the results suggest that cheating did not pay for these students since the proctored exam grades were 4.9 points higher than the un-proctored exam grades although this difference was significantly different at only the 10% level. One possible explanation for this is that there was slightly higher human capital in the class that had the proctored exam although this must have occurred by chance since the students did not know if the exams were going to be proctored in advance so there is no issue of selection bias. A Oaxaca decomposition of this difference in grades was conducted to see how much was due to human capital and how much was due to the differences in the rates of return to human capital. This analysis reveals that 17% of the difference was due to the higher human capital with the remaining 83% due to differences in the returns to human capital. It is possible that the un-proctored exam format does not encourage as much studying as the proctored format reducing both the returns to human capital and the exam scores.
Harmon, Oskar R. and Lambrinos, James, "Do Proctored Exams Matter In Online Classes?" (2006). Economics Working Papers. Paper 200608.