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The Effect of Performance-Based Incentives on Educational Achievement: Evidence from a Randomized Experiment

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  • Steven D. Levitt
  • John A. List
  • Sally Sadoff

Abstract

We test the effect of performance-based incentives on educational achievement in a low-performing school district using a randomized field experiment. High school freshmen were provided monthly financial incentives for meeting an achievement standard based on multiple measures of performance including attendance, behavior, grades and standardized test scores. Within the design, we compare the effectiveness of varying the recipient of the reward (students or parents) and the incentive structure (fixed rate or lottery). While the overall effects of the incentives are modest, the program has a large and significant impact among students on the threshold of meeting the achievement standard. These students continue to outperform their control group peers a year after the financial incentives end. However, the program effects fade in longer term follow up, highlighting the importance of longer term tracking of incentive programs.

Suggested Citation

  • Steven D. Levitt & John A. List & Sally Sadoff, 2016. "The Effect of Performance-Based Incentives on Educational Achievement: Evidence from a Randomized Experiment," NBER Working Papers 22107, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22107
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    1. repec:eee:ecoedu:v:64:y:2018:i:c:p:313-342 is not listed on IDEAS
    2. Robert Metcalfe & Simon Burgess and Steven Proud, 2011. "Student effort and educational attainment: Using the England football team to identify the education production function," Economics Series Working Papers 586, University of Oxford, Department of Economics.
    3. Damgaard, Mette Trier & Nielsen, Helena Skyt, 2018. "Nudging in education," Economics of Education Review, Elsevier, vol. 64(C), pages 313-342.
    4. Alec Brandon & Paul J. Ferraro & John A. List & Robert D. Metcalfe & Michael K. Price & Florian Rundhammer, 2017. "Do The Effects of Social Nudges Persist? Theory and Evidence from 38 Natural Field Experiments," Experimental Economics Center Working Paper Series 2017-04, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    5. Åslund, Olof & Engdahl, Mattias, 2018. "The value of earning for learning: Performance bonuses in immigrant language training," Economics of Education Review, Elsevier, vol. 62(C), pages 192-204.
    6. Steven D. Levitt & John A. List & Susanne Neckermann & Sally Sadoff, 2016. "The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 183-219, November.
    7. Eszter Czibor & David Jimenez-Gomez & John List, 2019. "The Dozen Things Experimental Economists Should Do (More of)," Artefactual Field Experiments 00648, The Field Experiments Website.
    8. Attali, Yigal & Neeman, Zvika & Schlosser, Analia, 2018. "Differential Performance in High vs. Low Stakes Tests: Evidence from the GRE Test," CEPR Discussion Papers 13360, C.E.P.R. Discussion Papers.
    9. Cappelen, Alexander W & Charness, Gary & Ekström, Mathias & Gneezy, Uri & Tungodden, Bertil, 2017. "Exercise Improves Academic Performance," Working Paper Series 1180, Research Institute of Industrial Economics.
    10. Jere R. Behrman & Susan W. Parker & Petra E. Todd & Kenneth I. Wolpin, 2015. "Aligning Learning Incentives of Students and Teachers: Results from a Social Experiment in Mexican High Schools," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 325-364.
    11. List, John A. & Livingston, Jeffrey A. & Neckermann, Susanne, 2018. "Do financial incentives crowd out intrinsic motivation to perform on standardized tests?," Economics of Education Review, Elsevier, vol. 66(C), pages 125-136.
    12. Elizabeth Lyons, 2016. "The Impact of Job-Specific Training on Short-Term Worker Performance: Evidence from a Field Experiment," Natural Field Experiments 00572, The Field Experiments Website.
    13. Analia Schlosser & Zvika Neeman & Yigal Attali, 2019. "Differential performance in high vs. low stakes tests: evidence from the GRE test," CESifo Working Paper Series 7590, CESifo Group Munich.
    14. repec:eee:jbrese:v:92:y:2018:i:c:p:210-218 is not listed on IDEAS

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development

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