Although education policymakers have become increasingly interested in using incentives to improve educational outcomes, the evidence continues to generate, at best, small impacts, leading to the question of whether such incentives can actually change student effort toward their educational attainment as suggested by Becker’s model of individual decision making. As a whole, we find evidence consistent with this model: students eligible for performance-based scholarships increased effort in terms of the amount and quality of time spent on educational activities and decreased time spent on other activities. Further, it appears that such changes in behavior do not persist beyond eligibility for the performance-based scholarship suggesting that such incentives do not permanently change their cost of effort or their ability to transform effort into educational outcomes. And, students expected to be most responsive to the incentive – such as those with fewer time constraints and those who may be more myopic in their time preferences – likely were.
An interesting implication would be the consequences of the research on the return to education of students. If at every quarter/semester students determine to remain registered or not. Then certain incentives can for each period maximize an investment so that the next period a net positive outcome is reached. From this a bigger return to educational investment is attained.