Should Students Get Paid for Test Scores?

A new study finds that school systems could benefit from paying students for improved performance.

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The question of how to motivate students to perform well at school is a tricky one, since most of the rewards for hard work come years, or even decades later. For young people, who tend to care less about the future than the present, that can seem like eons away.

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For the more specific question of how to get students to perform as well as they can during tests, a new paper from the National Bureau of Economic Research suggests that the answer might be relatively simple: Pay them. Students who received financial rewards for improved test performance directly after taking exams did better than those who did not receive such rewards. The details, of course, are a bit more complicated.

In the paper, "The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance,"  the authors looked at the test results of more than 7,000 elementary and high school students in the Chicago area. They offered a mix of financial ($10 or $20) and non-financial incentives (a trophy) for improved test performance, and told the students about the rewards right before they took the exam. One of the most powerful findings from the study is that framing a reward as a loss—giving students $20 before an exam, and informing them that they will only get to keep the money if their performance improves—had a more powerful effect than simply handing out the reward after the exam.

The following factors also had an impact:

Age: The study found that younger children were more likely to be swayed by rewards, especially non-financial rewards, than older students. Older students only improved their performance for the highest financial reward ($20) that was framed as a loss (i.e., given to students in advance and then taken away unless they improved their score).

Gender: Boys were more likely to respond to the rewards than girls. The researchers suggest that this effect could be partly caused by the fact that girls tend to be more intrinsically motivated to begin with. In other words, girls are already trying harder, regardless of any financial (or non-financial) incentives offered.

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Size of reward: According to the researchers, this study is the first to observe that the size of the financial reward makes a difference to students. The study found that rewarding the students with $20 had a greater impact than the $10 reward.

Financial versus non-financial rewards: While older students only improved their performance when tempted with a financial reward framed as a loss, younger students responded to the trophy reward as well. The researchers conclude that for elementary-age students, “non-financial incentives may be a cost-effective alternative to monetary rewards.” They add that it might also be more politically feasible, since school systems might be more comfortable handing out trophies than cash.

Time delay: The researchers offered the rewards to some students immediately after the test and to others with a month delay. They found that delaying the reward nullified any effect of the incentive, which suggests students value short-term rewards much more than delayed ones. That means that any incentives offered to students will likely have a great effect if they are given immediately, instead of months down the road.

The researchers also address the criticism that paying students for their performance could reduce any intrinsic motivation they feel to perform well on tests. They point out that because students have such low levels of intrinsic motivation to begin with, providing external rewards is unlikely to reduce it further. In fact, other studies have found that when students who received incentives in the past later take tests without such incentives, their performance continues to be better than the control groups.

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The researchers conclude that policymakers should consider providing incentives to students for improved test score results. The fact that students improved their scores when the anticipation of rewards loomed suggests that generally, when no incentives are involved, students are not trying their hardest.

Since test scores can have major consequences for schools and teachers competing for limited resources, principals might want to consider all their options. In fact, the researchers found in that certain circumstances, the effect of financial rewards on test scores can be as great as improving teacher quality or reducing class size by one-third. That’s the kind of result that educators (and parents) notice.