The effect of financial rewards on students' achievement: Evidence from a randomized experiment

Edwin Leuven (), Hessel Oosterbeek () and Bas van der Klaauw ()

No 65, Artefactual Field Experiments from The Field Experiments Website

Abstract: In a randomized field experiment where first year university students could earn financial rewards for passing all first year requirements within one year we find small and non-significant average effects of financial incentives on the pass rate and the numbers of collected credit points. There is however evidence that high ability students collect significantly more credit points when assigned to (larger) reward groups. Low ability students collect less credit points when assigned to larger reward groups. After three years these effects have increased, suggesting dynamic spillovers. The small average effect in the population is therefore the sum of a positive effect for high ability students and a (partly) off-setting negative effect for low ability students. A negative effect of financial incentives for less able individuals is in line with research from psychology and recent economic laboratory experiments which shows that external rewards may be detrimental for intrinsic motivation.

Keywords: financial incentives; student achievement; randomized social experiment; heterogeneous treatment effects higher education policy (search for similar items in EconPapers)
JEL-codes: I21 I22 (search for similar items in EconPapers)
Date: 2006
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Related works:
Working Paper: The e ect of financial rewards on students achievement: Evidence from a randomized experiment (2004)
Working Paper: The Effect of Financial Rewards on Students' Achievements: Evidence from a Randomized Experiment (2003)
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