Leveraging Behavioral Economics to Improve Educational Performance

Do incentives nudge students to exert more effort in their schoolwork? A recent study by University of Chicago analysts suggests they do, though the structure of the incentive is also important.

The researchers conducted field experiments from 2009 to 2011 in three high-poverty areas, including Chicago Public Schools and two nearby districts, with nearly 6,000 student participants in grades two through ten. Based on improved performance relative to a baseline score on a low-stakes reading or math assessment (not the state exam), various incentives were offered to different groups of pupils, such as a $10 or $20 reward, or a trophy worth about $3 along with public recognition of their accomplishment. The analysts offered no reward to students in a control group. To test whether pupils responded differently to immediate versus delayed incentives, some of the students received their reward right after the test—results were computed on the spot—while others knew the reward would be withheld for one month.

Several interesting findings emerged. First, the larger cash reward ($20) led to positive effects on test performance, while the smaller reward had no impact ($10). This suggests that, if offering a monetary reward, larger payouts will likely lead to more student effort. Second, the $3 trophy and public recognition also had a positive impact on achievement, though not as big of an effect as the $20 incentive. In addition to being cost-effective, this finding is important because in practice, non-cash incentives may be more acceptable in school environments. As the study authors note, “Schools tend to be more comfortable rewarding students with trophies, certificates, and prizes.” Third, incentives that were withheld from students for a month after the test did not improve performance. This suggests that sooner, rather than later, disbursement is an important feature of an effective incentive structure.  

It is possible that external incentives could “crowd out” intrinsic motivation—students may be less likely to work hard once an incentive is removed. The authors find no evidence of this when examining treated students’ low-stakes test scores after the incentives ceased. Instead, they conclude that incentives, when structured well, can help motivate students to put in just a little more effort.

Source: Steven D. Levitt, John A. List, Susanne Neckermann, and Sally Sadoff, “The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance,” American Economic Journal: Economic Policy (November 2016).

Aaron Churchill
Aaron Churchill is the Ohio Research Director of the Thomas B. Fordham Institute.