Thursday, September 30, 2010

Incentives Matter

(1) – I had my first test of the semester last week in Financial Accounting. If you would like to see a copy of that test, drop me a note at

(2) - Several weeks ago I heard part of a story on National Public Radio. It was about British sea captains who were transporting prisoners to Australia in the 1700s. Unfortunately, many of the prisoners were dying along the way. So, the British government changed the way they paid the sea captains. They began to pay only for each prisoner who arrived in Australia alive. Not surprisingly, the death rate dropped to nearly zero almost immediately.

The punch line of the story was that incentives matter.

I am a believer that you can encourage people to do almost anything if you figure out the right incentives. With an incentive that matters, people can practically leap tall buildings in a single bound.

Like every teacher, I get frustrated by my students on occasion. I give an assignment and they don’t do it or they don’t put significant time into it. Assuming that the assignment is not too tough for them, why don’t they do better? That is an easy answer. They don’t have any incentive to do better.

I once asked a class: “if I gave you each $1 million to make an A on our next test, how many of you would make an A?” Every hand in class was raised quickly. So, it was not a question of ability – with the right incentive, everyone will do enough work to make an A.

Assuming that you don’t have a lot of extra millions to give out, what incentives can you use? Historically, teachers often fall back on the old standby “this is likely to be on the test” to motivate students to work. However, that is such a negative incentive. It tells the students “learn this or else.” That is hardly a way to build excitement for learning.

Personally, I prefer not to use incentives at all. I think learning should be fun and the reward of knowledge and understanding should be enough to motivate students to do the work that is necessary.

At the same time, I realize that is a bit naïve. Students are humans and they will always put their energy where they perceive the greatest immediate benefit. So, at times a more tangible incentive is needed.

On Monday and Wednesday of this week, in my financial accounting class, we covered accounts receivable. The weather has been cool and rainy and the students have seemed especially lethargic. The next test is not for 2-3 more weeks. I could tell that many of them were going to defer thinking about accounts receivable until that next test. I needed to get them cranked up. Last night, I sent them an email saying that I was going to start class off on Friday with one quick question on accounts receivable. No penalty if they missed it but I would give them 2 bonus points on their next test if they got it correct.

I’m hoping this will be the incentive they need to focus their attention on this topic. Two points is not a lot but it provides them with a tangible reason to learn this material now and not wait until the night before the test.

I will write later and let you know if this bonus question works or not. However, I am convinced that appropriate incentives do work. So, if you are having a class that is not responding in the way that you would like, step back and consider what incentives they have for doing better. Perhaps changing those incentives a bit will change your results.

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