Students Respond To Monetary Incentives. Economists: "Duh."

Wednesday, 5 August 2009 10:03 by Eli Savit

The New York Times reports today that a program offering students up to $1000 for performance on Advanced Placement (AP) tests is showing signs of success.  Students in the program take the tests more frequently, are passing the tests at a higher rate, and are availing themselves of optional Saturday tutoring sessions geared towards AP subjects.   The results only cover the 2008-2009 school year and the program is relatively small (31 mostly minority schools participate) so the sample size is obviously limited.  Still, the results are a positive sign for those who think that student achievement can be raised through tangible and/or monetary incentives.

The notion that "people respond to incentives" is a basic principle of economics, but, as this blog has discussed previously, it is a relatively controversial proposition when the "people" involved are K-12 students.  But I think these criticisms will largely fall by the wayside if we start seeing more broadly-based success stories.  For all the money that is spent on motivating students to achieve in certain scholastic areas, offering kids incentives is probably one of the most cost-effective ways to realize whatever vision one might have for education.  After all, kids tend to have less money than adults, so a $1000 incentive is likely to mean a lot to a child.

Indeed, directly incentivizing student achievement allows individual donors to foment widescale educational change.  Last spring, we highlighted one of our donors who had an entire school competing to win $250 in prize money by writing the best essay on the Israeli-Palestinian conflict.   Many of our donors have since pledged gifts that incentivize things like college preparedness, social entrepreneurship, social studies achievement, career planning, or (as we highlighed in a blog post about our Chicago launch event) recognizing the importance of passing the basketball.  (Sign up or login to view these gifts).  

Part of our mission is for individuals at all income levels to change the face of the educational philanthropic landscape. My guess is that direct incentives to students will play a large role in the fulfillment of that mission, and will play an outsize role in the future of charitable giving.

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