When student incentives don’t work: evidence from a field experiment in Malawi

Financial Incentives have been often proposed to enhance students’ performance in school, but their impacts are theoretically ambiguous, and empirical evidence is mixed. “Tournament” incentives that reward only top performers could crowd out intrinsic motivation, and may affect a subgroup of students at the near the performance threshold. Through a field experiment among 5th to 8th graders in Malawi, we study impacts of two scholarship programs: a Standard scholarship program that rewarded top overall performers on an exam and a Relative scholarship program that rewarded the top performers within smaller groups of students with similar baseline scores. We find that the Standard scholarship program significantly decreased test scores and motivation to study, especially for those least likely to win the scholarship. By contrast, we find no evidence for test score impacts among those in the Relative scholarship program.