Standard-setting study is an official research study conducted by an organization that sponsors tests to determine a cutscore for the test. To be legally defensible in the US, in particular for high-stakes assessments, and meet the Standards for Educational and Psychological Testing, a cutscore cannot be arbitrarily determined; it must be empirically justified. For example, the organization cannot merely decide that the cutscore will be 70% correct. Instead, a study is conducted to determine what score best differentiates the classifications of examinees, such as competent vs. incompetent. Such studies require quite an amount of resources, involving a number of professionals, in particular with psychometric background. Standard-setting studies are for that reason impractical for regular class room situations, yet in every layer of education, standard setting is performed and multiple methods exist.
Standard-setting studies are typically performed using focus groups of 5-15 subject-matter-experts that represent key stakeholders for the test. For example, in setting cut scores for educational testing, experts might be instructors familiar with the capabilities of the student population for the test.