Effects of performance-based financial incentives on higher education students: A meta-analysis using causal evidence

Abstract

Many institutions provide financial incentives for higher education students contingent on their performance, hoping to increase their motivation and achievement. The aim of this meta-analysis was 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 were included. Performance-based financial incentives increased the number of college credits earned, marginally improved student grade point averages, and improved exam scores when targeted at a single subject. No evidence was found for differential effects on student populations by gender or first-generation college status. Neither the incentive amount nor a focus on low-income students influenced the incentive effectiveness in improving student grade point averages or credits earned. Tentative evidence suggests that incentive designs in which the number of reward recipients is limited are more beneficial to students from the upper median level of high school grade point average. Hence, the study implies that it is more beneficial to provide lower-amount incentives attainable by a larger number of students than to provide higher-amount incentives attainable only by a 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 toward evidence-based practice.