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Drinking from the Fountain of Knowledge: Student Incentive to Study and Learn - Externalities, Information Problems and Peer Pressure


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  • Bishop, John
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    Students face four decision margins: (a) How many years to spend in school, (b) What to study, (c) How much effort to devote to learning per year and (d) Whether to disrupt or assist the learning of classmates. The thousands of studies that have applied human capital theory to the first two questions are reviewed elsewhere in this volume and the Handbook series. This chapter reviews an emerging economic literature on the effects of and determinants of student effort and cooperativeness and how putting student motivation and behavior at center of one's theoretical framework changes one's view of how schools operate and how they might be made more effective. In this new framework students have a dual role. They are both (a) investors/consumers who choose which goals (outputs) to focus on and how much effort to put into each goal and (b) workers getting instruction and guidance from their first-line supervisors, the teachers. A simple model is presented in which the behavior of students, teachers and administrators depends on the incentives facing them and the actions of the other actors in the system. The incentives, in turn, depend upon the cost and reliability of the information (signals) that is generated about the various inputs and outputs of the system. Our review of empirical research support many of the predictions of the model. Student effort, engagement and discipline vary a lot within schools, across schools and across nations and have significant effects on learning. Higher extrinsic rewards for learning are associated the taking of more rigorous courses, teachers setting higher standards and more time devoted to homework. Taking more rigorous courses and studying harder increase student achievement. Post-World War II trends in study effort and course rigor, for example, are positively correlated with achievement trends. Even though, greater rigor and higher standards improve learning, parents and students prefer easy teachers. They pressure tough teachers to lower standards and sign up for courses taught by easy graders. Curriculum-based external exit examinations (CBEEES) improve the signaling of academic achievement to colleges and the labor market and this increases extrinsic rewards for learning. Cross-section studies suggest that CBEEES result in greater focus on academics, more tutoring of lagging students, and higher levels of achievement. Minimum competency examinations (MCE) do not have significant effects on learning or dropout rates but they do appear to have positive effects on the reputation of high school graduates. As a result, students from MCE states earn significantly more than students from states without MCEs and the effect lasts at least eight years. Students who attend schools with studious well-behaved classmates learn more. Disruptive students generate negative production externalities and cooperative hard-working students create positive production externalities. Peer effects are also generated by the norms of student peer cultures that encourage disruptive students and harass nerds. In addition learning is poorly signaled to employers and colleges. Thus, market signals and the norms of student peer culture do not internalize the externalities that are pervasive in school settings and as a result students typically devote less effort to studying than the taxpayers who fund schools would wish.

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    This chapter was published in:

  • Erik Hanushek & F. Welch (ed.), 2006. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 2, number 2, June.
    This item is provided by Elsevier in its series Handbook of the Economics of Education with number 2-15.

    Handle: RePEc:eee:educhp:2-15

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    Keywords: academic achievement; signaling achievement; student motivation; student engagement; homework; high school exit exams; student accountability; human capital theory; peer culture; peer effects; student norms; educational standards; peer learning externalities; payoffs to academic achievement; academic climate; nerd harassment; secondary education; K-12 education; PISA (Program for International Student Assessment);

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    Cited by:
    1. Maria De Paola & Vincenzo Scoppa, 2008. "A signalling model of school grades: centralized versus decentralized examinations," Economics of Education Working Paper Series 0025, University of Zurich, Institute for Strategy and Business Economics (ISU).
    2. Eric A. Hanushek & Susanne Link & Ludger Woessmann, 2011. "Does School Autonomy Make Sense Everywhere? Panel Estimates from PISA," NBER Working Papers 17591, National Bureau of Economic Research, Inc.
    3. Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
    4. Luehrmann, Melanie & Chevalier, Arnaud & Dolton, Peter, 2013. "Making it count Evidence from a Field Experiment on Assessment Rules, Study Incentives and Student Performance," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79795, Verein für Socialpolitik / German Economic Association.
    5. Marc Piopiunik & Martin Schlotter, 2012. "Identifying the Incidence of "Grading on a Curve":A Within-Student Across-Subject Approach," Ifo Working Paper Series Ifo Working Paper No. 121, Ifo Institute for Economic Research at the University of Munich.
    6. Piopiunik, Marc & Schwerdt, Guido & Woessmann, Ludger, 2013. "Central school exit exams and labor-market outcomes," European Journal of Political Economy, Elsevier, vol. 31(C), pages 93-108.
    7. Koerselman, Kristian, 2013. "Incentives from curriculum tracking," Economics of Education Review, Elsevier, vol. 32(C), pages 140-150.
    8. Martin R. West & Ludger Woessmann, 2010. "'Every Catholic Child in a Catholic School': Historical Resistance to State Schooling, Contemporary Private Competition and Student Achievement across Countries," Economic Journal, Royal Economic Society, vol. 120(546), pages F229-F255, 08.
    9. Ouazad, Amine & Page, Lionel, 2013. "Students' perceptions of teacher biases: Experimental economics in schools," Journal of Public Economics, Elsevier, vol. 105(C), pages 116-130.
    10. Luis Fernando Gamboa & Mauricio Rodríguez-Acosta & Andrés Felipe García-Suaza, 2010. "Academic achievement in sciences: the role of preferences and educative assets," DOCUMENTOS DE TRABAJO 006701, UNIVERSIDAD DEL ROSARIO.


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