Financial Incentives and Educational Investment: The Impact of Performance-Based Scholarships on Student Time Use

54 Pages Posted: 24 Aug 2013

See all articles by Lisa Barrow

Lisa Barrow

Federal Reserve Bank of Chicago

Cecilia E. Rouse

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2013

Abstract

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.

Suggested Citation

Barrow, Lisa and Rouse, Cecilia E., Financial Incentives and Educational Investment: The Impact of Performance-Based Scholarships on Student Time Use (August 2013). NBER Working Paper No. w19351. Available at SSRN: https://ssrn.com/abstract=2315436

Lisa Barrow (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States
312-322-5073 (Phone)
312-322-2357 (Fax)

Cecilia E. Rouse

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
United States
609-258-4042 (Phone)
609-258-2907 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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