"Grades just don't matter"

In class last week our Statistics professor made a statement that, for us doctoral candidates, "grades just don't matter." This was on the heels of a midterm examination the week before that literally traumatized a number of us. It wasn't clear to us at the time whether he was warning us that we were about to see grades that would depress us if we thought that they did matter.

Now that those grades are out, it looks like we didn't do as badly as we thought we would. Knowing that, we have to wonder how to interpret those comments by our professor. It is probably true that there will be few instances (if any at all) in which we will be asked for a copy of our doctoral program transcript - it is pretty widely acknowledged that the only thing that really matters is how many papers you publish and conferences you attend before you graduate. If that is the case, why was I so elated with my midterm grade? Similarly, why is the grade I just received for the homework I just turned in (I didn't do so well this last time) stinging me so badly?

Listening to my colleagues discussing and comparing grades shows that, even in a situation where grades are essentially irrelevant, we are competitive beings. There is no objective reason why I should care how my colleagues in Decision Sciences or Finance fared in the Economics midterm, right?

One last thought on this - if grades really don't matter, why aren't us doctoral students getting graded on a pass/fail basis (like it was in business school)?? It seems counter-intuitive to assign them to us if nobody is ever going to want to see them. The beauty of a pass/fail system is that you still have to do enough work to not fail, meaning that you remove the competition without allowing people to slack off. Just a thought...