Financial Incentives and Educational Investment: The Impact of Performance-Based Scholarships on Student Time Use
Using survey data from a field experiment in the U.S., we test whether and how financial incentives change student behavior. We find that providing post-secondary scholarships with incentives to meet performance, enrollment, and/or attendance benchmarks induced students to devote more time to educational activities and to increase the quality of effort toward, and engagement with, their studies; students also allocated less time to other activities such as work and leisure. While the incentives did not generate impacts after eligibility had ended, they also did not decrease students' inherent interest or enjoyment in learning. Finally, we present evidence suggesting that students were motivated more by the incentives provided than simply the effect of giving additional money, and that students who were arguably less time-constrained were more responsive to the incentives as were those who were plausibly more myopic. Overall these results indicate that well-designed incentives can induce post-secondary students to increase investments in educational attainment.
We thank Eric Auerbach, Laurien Gilbert, Ming Gu, Steve Mello, and Lauren Sartain for expert research assistance; Leslyn Hall and Lisa Markman Pithers with help developing the survey; and Elijah de la Campa and Reshma Patel for extensive help in understanding the MDRC data. Orley Ashenfelter, Alan Krueger, Jonas Fisher, Derek Neal, Reshma Patel, and Lashawn Richburg-Hayes as well as seminar participants at Cornell University, the Federal Reserve Bank of Chicago, Federal Reserve Bank of New York, Harvard University, Michigan State, Princeton University, University of Chicago, University of Pennsylvania, and University of Virginia provided helpful conversations and comments. Some of the data used in this paper are derived from data files made available by MDRC. We thank the Bill & Melinda Gates Foundation and the Princeton University Industrial Relation Section for generous funding. The authors remain solely responsible for how the data have been used or interpreted. Any views expressed in this paper do not necessarily reflect those of the Federal Reserve Bank of Chicago or the Federal Reserve System. Any errors are ours. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- Well-designed incentives can induce post-secondary students to increase investments in educational attainment. Many policies...
Financial Incentives and Educational Investment: The Impact of Performance-Based Scholarships on Student Time Use Lisa Barrow and Cecilia Elena Rouse Education Finance and Policy 0 0:ja, 1-55 citation courtesy of