We explore the power of behavioral economics to influence the level of effort exerted by students in a low stakes testing environment. We find a substantial impact on test scores from incentives when the rewards are delivered immediately. There is suggestive evidence that rewards framed as losses outperform those framed as gains. Nonfinancial incentives can be considerably more cost-effective than financial incentives for younger students, but are less effective with older students. All motivating power of incentives vanishes when rewards are handed out with a delay. Our results suggest that the current set of incentives may lead to underinvestment.
Levitt, Steven D., John A. List, Susanne Neckermann, and Sally Sadoff.
"The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance."
American Economic Journal: Economic Policy,
Behavioral Microeconomics: Underlying Principles
State and Local Government: Health; Education; Welfare; Public Pensions
Analysis of Education
Education: Government Policy