Learning for a bonus: How financial incentives interact with preferences

Abstract

This paper investigates the effect of financial incentives on student performance and analyzes for the first time how the incentive effect in education is moderated by students' risk and time preferences. To examine this interaction we use a natural experiment that we combine with data from surveys and economic experiments on risk and time preferences. We not only find that students who are offered financial incentives for better grades have on average better first-and second-year grade point averages, but more importantly, we find that highly impatient students respond more strongly to financial incentives than less impatient students. This finding suggests that financial incentives are most effective if they solve educational problems of myopic students.

Occupational specificity: A new measurement based on training curricula and its effect on labor market outcomes

“…Third, regarding the problem of selection into occupations in principal, previous empirical studies have shown that teenagers who choose an apprenticeship at the age of fifteen have a strong preference for those occupations that are regionally available (Oswald & Backes-Gellner, 2014), which substantially restricts their spectrum for self-selection.…”

The development of non-cognitive skills in adolescence

“…For a detailed description of the data seeOswald and Backes-Gellner (2014), who use early waves of the data to investigate the education production of grades.2 Grit, however, while characterizing the passion for long-term goals, is not merely a measure of time preferences: the correlation between the Grit measure and experimentally elicited time preferences in our data is only .1.…”

An Examination on the Effect of Prior Knowledge, Personal Goals, and Incentive in an Online Employee Training Program

“…Hence, we assumed that the availability of financial incentive attracted participants to join the program and explore the content, but was not powerful enough to drive them to spend more effort beyond Phase 2 of transformative learning even though participants would not receive the technology grant until they completed the program (Figure ). This seemed to be well supported by the result of Oswald and Backes‐Gellner's () study on the effectiveness of financial incentive at the beginning of a program. In addition, this assumption explained why the incentive availability did not predict participants' program completion.…”

“…Overall, the power of financial incentive did not sustain participants throughout the program. According to the findings of Oswald and Backes‐Gellner's () study, it only worked at the beginning of a long‐term program. Results of Brook et al's (2008) study in adult literacy learning demonstrated that financial incentives, when given in a small amount, had a negative effect on attendance.…”