This paper investigates the effect of financial incentives on student performance and analyzes for the first time how the incentive effect in education is moderated by students' risk and time preferences. To examine this interaction we use a natural experiment that we combine with data from surveys and economic experiments on risk and time preferences. We not only find that students who are offered financial incentives for better grades have on average better first-and second-year grade point averages, but more importantly, we find that highly impatient students respond more strongly to financial incentives than less impatient students. This finding suggests that financial incentives are most effective if they solve educational problems of myopic students.
Summary
Although previous literature has found substantial differences between female and male workers in almost all labor market outcomes, the question of whether training participation differs between female and male part‐time workers has been neglected. This article provides a novel examination of whether the part‐time training gap is gender‐dependent. Using a Swiss dataset, we find that men engaged in part‐time employment suffer from a serious training disadvantage in comparison to men working full‐time and that this effect is not found for women. Thus, in countries where part‐time participation levels differ significantly between men and women, part‐time employment is a “bane” to men but not to women. Women, however, “pay the price” merely by virtue of being female.
Evidence suggests that acquiring human capital is related to better life outcomes, yet young peoples' decisions to invest in or stop acquiring human capital are still poorly understood. We investigate the role of time and reference-dependent preferences in such decisions. Using a data set that is unique in its combination of real-world observations on student outcomes and experimental data on economic preferences, we find that a low degree of long-run patience is a key determinant of dropping out of upper-secondary education. Further, for students who finish education we show that one month before termination of their program, present-biased students are less likely to have concrete continuation plans while loss averse students are more likely to have a definite job offer already. Our findings provide fresh evidence on students' decisionmaking about human capital acquisition and labor market transition with important implications for education and labor market policy.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.