The “Opportunity Knocks” Supplemental Merit Scholarships Project

Research Summary:

Rewarding higher marks with money doesn’t make the grade

Offering cold, hard cash to students in an effort to improve their marks in college or university may be more expensive than it is effective.

While many an enterprising parent has at least considered rewarding good grades with money, a new study commissioned by the Higher Education Quality Council of Ontario (HEQCO) finds the approach has modest overall effects.

Project Description

The goal of the “Opportunity Knocks” Supplemental Merit Scholarship Project was to learn more about the potential for merit-based scholarships to provide both additional financial support and motivation for improved academic performance. The study, conducted by researchers from the University of Toronto, OISE/UT and the Massachusetts Institute of Technology, involved first- and second-year students receiving financial aid in 2008-2009 at the University of Toronto Scarborough.

All first-year and second-year students on financial aid were invited to participate. Those selected by lottery into the study were given money for obtaining course grades above 70 per cent. They were also given free access to regular peer advising services to discuss academic matters as well as issues arising from campus life. For each one-semester course, students received $100 for obtaining a grade average of 70 per cent, and $20 for each percentage point above a grade of 70 per cent.

Before the study got underway, participants, on average, indicated that they expected the program to be somewhat helpful in improving their grades. Well over half of the participants said they were very concerned about having sufficient funds to complete their university degree.

Findings/Policy Implications

The results show that the financial incentives had a modest positive effect on grades, and had very small positive effects in the subsequent year, after the scholarship offer ended. The authors note, however, that the effects were stronger for those participants who had a better understanding of how the financial reward program worked.

While the program was popular with participants and both sign-up rates and engagement were high, the modest impact on student achievement is consistent with other studies evaluating interventions of this type. The authors characterize merit-based aid as “an expensive approach for trying to generate modest effects on retention and performance.” They acknowledge that different incentive schemes, such as offering larger amounts of money or rewarding improvement on grades that are lower than 70 per cent ight lead to stronger effects.

The authors suggest that ineffective study habits may be a barrier to academic achievement  and that the issue may be more a lack of academic preparation than a lack of effort or motivation. They note that the availability of advising and other support services do not appear to have helped extensively. They conclude that other potential avenues for improving performance, or alternative approaches to teaching, are needed at the high school and postsecondary levels.

This study was conducted by Joshua Angrist, Department of Economics, MIT; Tony Chambers, Ontario Institute for Studies in Education, University of Toronto; Philip Oreopoulos, Department of Economics, University of Toronto; and Tyler Williams, Department of Economics, MIT.​