DP3921 The Effect of Financial Rewards on Students' Achievements: Evidence from a Randomized Experiment

Author(s): Edwin Leuven, Hessel Oosterbeek, Bas van der Klaauw
Publication Date: June 2003
Keyword(s): financial incentives, heterogenous treatment effects, randomized social experiment, student acheivement, university education
JEL(s): I21, I22, J24
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3921

This Paper reports a randomized field experiment in which first year economics and business students at the University of Amsterdam could earn financial rewards for passing all first year requirements before the start of their second academic year. Participants were assigned to a high reward group, a low reward group or a no reward (control) group. Overall, the passing rate and the numbers of collected credit point are not significantly different across the three groups. The same is true for the reported amounts of study time. We find, however, some evidence of heterogenous treatment effects. In particular, students with high maths skills and students with higher educated fathers have higher passing rates and collect more credit points when assigned to (higher) reward groups. While reported study time for these groups is not affected by treatment status, these students claim that they have studied harder as a consequence of the rewards.