The Power of Now: Incentives that Work

Here’s an interesting new study by Freakonomics author, Steven Levitt.  Wondering how incentives affect student performance, Levitt and fellow researchers studied student performance within a wide variety of incentive structures and found a few things worth considering.  First, they found that not only does money work, but the amount of money makes a difference.  In fact, students performed better when offered a large sum over a smaller sum.

Second, they found that students responded differently to losses than to gains.  This appears to be keeping with larger studies that have found that adults are also more averse to losses than gains.  For example, students performed better when given money before the test and were told they would lose it if they fared poorly than when they were offered money if they performed well on the test.

Third, the researchers found that less tangible incentives, rewards like trophies and badges, worked well for students.  And fourth, they learned that students were much more likely to perform well when the payoff was immediate, e.g. immediately following the test rather than weeks later.

Nothing all that surprising.  We’ve long known that adults respond in similar fashion.  Business incentives work best when they are both concrete and provided in a relatively short amount of time, e.g. not at the end of the year.  We also know that adults are much more aggressive about keeping what they have and a bit more relaxed about losing out on future gains.  Still, this latest study provides interesting food for thought.  Most districts focus on the gains made by the end of the year as measured through high stakes assessments.  But for many students those assessments mean little.  Levitt’s study suggests some subtle ways we might be able to incentivize students to devote more energy and effort to these  critical assessments.

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