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

In: Handbook of the Economics of Education


  • Bishop, John


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.

Suggested Citation

  • Bishop, John, 2006. "Drinking from the Fountain of Knowledge: Student Incentive to Study and Learn - Externalities, Information Problems and Peer Pressure," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 2, chapter 15, pages 909-944, Elsevier.
  • Handle: RePEc:eee:educhp:2-15

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. 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.
    2. 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 229-255, August.
    3. repec:eee:deveco:v:133:y:2018:i:c:p:275-294 is not listed on IDEAS
    4. Schwerdt, Guido & Woessmann, Ludger, 2017. "The information value of central school exams," Economics of Education Review, Elsevier, vol. 56(C), pages 65-79.
    5. Hanushek, Eric A. & Link, Susanne & Woessmann, Ludger, 2013. "Does school autonomy make sense everywhere? Panel estimates from PISA," Journal of Development Economics, Elsevier, vol. 104(C), pages 212-232.
    6. Chevalier, Arnaud & Dolton, Peter & Lührmann, Melanie, 2014. ""Making It Count": Evidence from a Field Study on Assessment Rules, Study Incentives and Student Performance," IZA Discussion Papers 8582, Institute of Labor Economics (IZA).
    7. 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, Department of Business Administration (IBW).
    8. 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.
    9. De Fraja, Gianni & Martínez-Mora, Francisco, 2014. "The desegregating effect of school tracking," Journal of Urban Economics, Elsevier, vol. 80(C), pages 164-177.
    10. Schwerdt, Guido & Woessmann, Ludger, 2017. "The information value of central school exams," Economics of Education Review, Elsevier, vol. 56(C), pages 65-79.
    11. 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.
    12. 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.
    13. Stefanie Dufaux, 2012. "Assessment for Qualification and Certification in Upper Secondary Education: A Review of Country Practices and Research Evidence," OECD Education Working Papers 83, OECD Publishing.
    14. 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.
    15. Sarojini Hirshleifer, 2017. "Incentives for Effort or Outputs? A Field Experiment to Improve Student Performance," Working Papers 201701, University of California at Riverside, Department of Economics.
    16. 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.
    17. repec:eee:jpolmo:v:40:y:2018:i:5:p:1022-1037 is not listed on IDEAS
    18. Koerselman, Kristian, 2013. "Incentives from curriculum tracking," Economics of Education Review, Elsevier, vol. 32(C), pages 140-150.
    19. Delprato, Marcos & Akyeampong, Kwame & Dunne, Máiréad, 2017. "The impact of bullying on students’ learning in Latin America: A matching approach for 15 countries," International Journal of Educational Development, Elsevier, vol. 52(C), pages 37-57.
    20. Marc Piopiunik & Martin Schlotter, 2012. "Identifying the Incidence of "Grading on a Curve": A Within-Student Across-Subject Approach," ifo Working Paper Series 121, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.


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