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Loss Aversion and Student Achievement

Author

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  • David M McEvoy

    (Appalachian State University)

Abstract

We conduct a field experiment to test if loss aversion behavior can be exploited to improve student performance in an undergraduate statistics course. In one treatment (gains), student grades were reported as points gained, and in the other treatment (losses) grades were reported as points lost. When controlling for other factors that affect student performance, we find that students in the loss treatment earned statistically higher grades than students in the gain treatment. Although preliminary, the results suggest that a simple manipulation of how grades are framed in the classroom can be a costless way to exploit loss aversion behavior and lead to higher student achievement.

Suggested Citation

  • David M McEvoy, 2016. "Loss Aversion and Student Achievement," Economics Bulletin, AccessEcon, vol. 36(3), pages 1762-1770.
  • Handle: RePEc:ebl:ecbull:eb-16-00033
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    File URL: http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I3-P172.pdf
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    References listed on IDEAS

    as
    1. Azmat, Ghazala & Iriberri, Nagore, 2010. "The importance of relative performance feedback information: Evidence from a natural experiment using high school students," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 435-452, August.
    2. Roland G. Fryer, 2011. "Financial Incentives and Student Achievement: Evidence from Randomized Trials," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(4), pages 1755-1798.
    3. Roland Fryer & Steven Levitt & John List & Sally Sadoff, 2012. "Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment," Framed Field Experiments 00591, The Field Experiments Website.
    4. Eric P. Bettinger, 2012. "Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 686-698, August.
    5. Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1039-1061.
    6. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    7. repec:wly:soecon:v:81:4:y:2015:p:980-994 is not listed on IDEAS
    8. Joshua Angrist & Victor Lavy, 2009. "The Effects of High Stakes High School Achievement Awards: Evidence from a Randomized Trial," American Economic Review, American Economic Association, vol. 99(4), pages 1384-1414, September.
    9. Roland G. Fryer, 2013. "Teacher Incentives and Student Achievement: Evidence from New York City Public Schools," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 373-407.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Damgaard, Mette Trier & Nielsen, Helena Skyt, 2018. "Nudging in education," Economics of Education Review, Elsevier, vol. 64(C), pages 313-342.
    2. Ballis, Briana & Lusher, Lester & Martorell, Paco, 2022. "The effects of exam frames on student effort and performance," Economics of Education Review, Elsevier, vol. 90(C).
    3. Paul J. Ferraro & J. Dustin Tracy, 2022. "A reassessment of the potential for loss-framed incentive contracts to increase productivity: a meta-analysis and a real-effort experiment," Experimental Economics, Springer;Economic Science Association, vol. 25(5), pages 1441-1466, November.
    4. Kunal Rajesh Lahoti & Shivani Hanji & Pratik Kamble & Kavita Vemuri, 2023. "Impact of Loss-Framing and Risk Attitudes on Insurance Purchase: Insights from a Game-like Interface Study," Papers 2310.13300, arXiv.org.
    5. Wagner, Valentin, 2022. "Heterogeneous effects of grade framing," Labour Economics, Elsevier, vol. 74(C).
    6. Tobias Schütze & Philipp C. Wichardt & Philipp Christoph Wichardt, 2023. "A Real Effort vs. Standard Public Goods Experiment: Overall More All-or-Nothing, Lower Average Contributions and Men Become More Selfish in the Effort-Loss Frame," CESifo Working Paper Series 10444, CESifo.

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    More about this item

    Keywords

    loss aversion; field experiment; grades; behavioral economics;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • I2 - Health, Education, and Welfare - - Education

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