A meta-analysis on the effects of performance-based financial incentives on higher education students



Year of publication 2023
Type Appeared in Conference without Proceedings
MU Faculty or unit

Faculty of Arts

Description Many institutions provide financial incentives for higher education students contingent on their performance hoping to increase their motivation and achievement. The incentives are offered in both fee-paying and free-education contexts, with some organizations providing the incentives simply out of the principle of rewarding students for their merit, while some providing them with an explicit intention of improving students’ motivation and ultimately students’ achievement. However, the question of what effect performance-based financial incentives have on higher education students, or the question of what context performance-based financial incentives work in remain largely unanswered. The aim of this meta-analysis is to evaluate the effects of performance-based financial incentives on higher education students using causal evidence. A total of 18 randomized controlled trials involving 20,286 students are included. The results suggest that performance-based financial incentives increase the number of college credits earned, marginally improve student grade point average, and when given at single subject, they improve exam score. Neither the incentive amount nor the focus on low-income students influences the incentive effectiveness. No evidence is found for differential effects on student populations by gender or first-generation college status. Tentative evidence suggests that incentive designs where the number of reward recipients is limited are more beneficial to students from upper median of high-school grade point average. Incentive schemes aimed at improving performance of wide spectrum of higher education students should be designed in a way that reflects these heterogenous effects – the incentives’ benchmarks should be attainable by most – if not by all – students, and the number of the recipients should not be limited by a strict number or percentage of the best-performing students. When accounting for the null finding on the moderating role of the incentive amount, another tentative claim can be made – it is more beneficial to provide lower-amount incentives attainable by larger number of students, than to provide higher-amount incentives attainable only by small number of students. The results of this meta-analysis are of interest for researchers, policymakers, and stakeholders in higher education involved in designing financial incentive schemes for higher education students – providing a substantial step towards evidence-based practice.
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