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

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  • Edwin Leuven
  • Hessel Oosterbeek
  • Bas van der Klaauw

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.

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File URL: http://karlan.yale.edu/fieldexperiments/papers/00078.pdf
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Bibliographic Info

Paper provided by The Field Experiments Website in its series Artefactual Field Experiments with number 00078.

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Date of creation: 2006
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Handle: RePEc:feb:artefa:00078

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Web page: http://www.fieldexperiments.com

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  1. Kremer, Michael Robert & Miguel, Edward A. & Thorton, Rebecca L, 2004. "Incentives to Learn," Center for International and Development Economics Research, Working Paper Series qt9kc4p47q, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  2. Tomas Philipson, 1999. "External Treatment Effects and Program Implementation Bias," Working Papers 9929, Harris School of Public Policy Studies, University of Chicago.
  3. James J. Heckman & Lance Lochner & Christopher Taber, 1999. "General Equilibrium Cost Benefit Analysis of Education and Tax Policies," NBER Working Papers 6881, National Bureau of Economic Research, Inc.
  4. Joshua D. Angrist & Victor Lavy, 2002. "The Effect of High School Matriculation Awards: Evidence from Randomized Trials," NBER Working Papers 9389, National Bureau of Economic Research, Inc.
  5. Joshua Angrist & Eric Bettinger & Erik Bloom & Elizabeth King & Michael Kremer, 2002. "Vouchers for Private Schooling in Colombia: Evidence from a Randomized Natural Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1535-1558, December.
  6. Michael Kremer & Edward Miguel & Rebecca Thornton, 2004. "Incentives to learn," Natural Field Experiments 00289, The Field Experiments Website.
  7. Erica Field, 2006. "Educational Debt Burden and Career Choice: Evidence from a Financial Aid Experiment at NYU Law School," NBER Working Papers 12282, National Bureau of Economic Research, Inc.
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