The Effect of Financial Rewards on Students' Achievement : Evidence from a Randomized Experiment

This paper reports about a randomized field experiment in which first year economics and business students at the University of Amsterdam could earn financial rewards for passing all first year requirements before the start of their second academic year. Participants were assigned to a high reward group, a low reward group or a no rewards (control) group. Overall, the passing rate and the numbers of collected credit points are not significantly different across the three groups. We find, however, some evidence of heterogenous treatment effects. In particular, students with high math skills and students with higher educated fathers have higher passing rates and collect more credit points when assigned to the (high) reward groups. While reported study time for these groups is not affected by treatment status, these students claim that they have studied harder as a consequence of the rewards