I remember reading or watching something that I can no longer find about how US public education creates a false economy for its students by its use of numeric grades which they accumulate throughout their schooling and how these grades are a kind of currency exchanged for being "good students."

I don't know if "false economy" is the correct term though. The wiki says:

a false economy or hallucinated economy is an action that does save money at the beginning but which, over a longer period of time, results in more money being spent or wasted than being saved.

But this is more about economizing as opposed to a broader concept of "fake" economy with a fake currency that incentivizes certain behaviors over others. Perhaps these are short-term over long-term behaviors (like in the wiki above) or that the grades can only measure limited aspects of students performance but are a reification of subjective performance into absolute worth or like Goodhart's law the grades are a key performance indicator (KPI) and don't actually measure what they should be measuring. The topic itself isn't strictly about education and can applied more broadly.

Does anyone know if there is a better term or if I'm off base and completely wrong?