SMART Money: Do Financial Incentives Encourage College Students to Study Science?

Increasing the number of science, technology, engineering, and mathematics (STEM) degrees is a major federal education priority. I investigate whether providing a $4,000 financial incentive to low-income students in their junior and senior years of college induces them to major in a STEM field. Using administrative data from Ohio public colleges, I exploit a discontinuity in income eligibility for the National SMART Grant on the pursuit of science majors. Regression discontinuity results indicate financial incentives do not encourage students at the threshold of eligibility to choose STEM majors in their junior year. The null findings are fairly precise, ruling out modest, policy relevant effects for students near the Pell Grant eligibility threshold. I examine several potential explanations of this null result and argue that federal policy makers could improve the design of the program by creating the financial incentive earlier in students’ educational careers.