Insights on Loss Aversion and Academic Performance
Explore the impact of loss aversion on student performance in economics education through innovative strategies and field experiments. Discover how framing and incentives influence student outcomes and gender effects in the classroom.
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Presentation Transcript
Loss Aversion as Incentive to Study Guglielmo Volpe School of Economics and Finance Queen Mary University of London Developments in Economics Education Conference, Birmingham 10th-11thSeptember 2015
The Broad Idea Can we use insights from Behavioural Economics to inform teaching, learning and assessment strategy in a way that academic and (possibly) other aspects of students performance are enhanced?
The Talk Heterogeneous Gender Effects under Loss Aversion in the Economics Classroom: A Field Experiment Apostolova-Mihaylova M., Cooper W., Hoyt G., Marshall E.C. Southern Economic Journal, 2015, 81(4), 980-994
The Experiment Framing Loss Aversion in assessment strategy Loss aversion Individuals respond asymmetrically when they are faced with the prospect of gains or losses Individuals are much more unhappy about losing an asset as they are happy about acquiring the same asset The hypothesis Induce higher student performance by framing grades as a reduction from the maximum points allowed, as opposed to a gain in score from the minimum points possible
Field Experiment Design Treatment: Penalty contract-aversion Students are given points when the course commences and progressively lose points throughout the semester for incorrect answers Control: Reward contract-reciprocity Students earn points as various assessments are completed throughout the year
Results Framing does not have an overall impact on students outcomes Differentiated response to loss aversion by gender In the treatment group, males score between 2.88 and 4.19 percentage points higher than the control group In the treatment group, females score between 3.30 and 4.33 percentage points lower than females in the control group
Time Inconsistency and Loss Aversion Student Effort in Preparing for Exams: Intertemporal Preferences and Loss Aversion W st K., Beck H. Decision Sciences Journal of Innovative Education, 2012, 10(2), 245-262
Hypotheses Hyperbolic discounting: time inconsistency Students behave time inconsistently and prefer the larger- later reward i.e. a good grade, in the long run, but in the short term sacrifice the prospects of a good grade for immediate leisure time Loss Aversion Students will be more eager to avoid a deterioration of their grade which would be perceived as a loss than they are to sacrifice time or money to improve their grade which would be perceived as a gain
Method Questionnaire distributed at start and end of term (before final exam) Students asked about the total time they planned to spend (or had spent) on preparation of final exam Two versions of questionnaire: A: students asked how much extra time they would invest to improve their grade by 0.3 B: students asked how much time they should be given back in return for a grade which was 0.3 worse than their acquired one
Results Students behave time-inconsistently At the beginning of the term, students understand that it is necessary to learn, but the planned number of learning hours decreases significantly as the end of the term approaches Students show loss-aversion Students are willing to study more to improve their grade than they would spend more leisure time in exchange for a deterioration of their grade
What did I do Year 1 Statistical Methods in Economics module Assessment 7 very short (5 minutes) in class tests worth 2 marks each (last test is worth 3 marks) Statistical project (15 marks) Final exam (70 marks) Frame Loss Aversion in assessment in order to induce more effort/better performance Change introduced first in 2013/14
Framing Loss Aversion In class test results presented in the following way: Test 1 Test 2 Test 3 Test 4 Test 5 Test 6 Test 7 Tot. Available Marks Maximum mark you can achieve by end of semester Max % mark you can achieve by end of semester after nth test In 2013/14 Students could see each other s results In 2014/15 Students could see only their own results
Summary statistics Average assessment marks over the years n In Class tests Project Exam 2011/12 136 68.7 66.2 53.3 2012/13 186 62.9 71.2 61.3 2013/14 191 74.0 69.7 53.6 2014/15 197 70.2 67.8 56.6
Testing for differences in means The average in-class test results are significantly higher under the loss aversion framework The 2014/15 average test scores are significantly (at 5% level) lower than in 2013/14 Does comparing relative performance spur incentives to work harder? There are no significant differences in the project average scores There is a significant difference in average exam scores between 2012/13 and 2013/14 It is likely that this difference has to do with my exam paper design . But, generally, no evidence of impact on exam marks .
Random thoughts.. Could loss-aversion play a role? More statistical analysis . Need to check for gender differences? Treatment and Control Groups Borrow insights from behavioural economics? Potentially costless changes that have positive impact? E.g.: group work, learning diaries, learning contract etc. to ameliorate time inconsistency problem?
