Michael Kremer

English

Research Papers in Economics

 
 
Motivation Matters:  
Merit Scholarships and Student Achievement 
 
Michael Kremer 
M 
 
erit scholarships, largely diminished in the 
United States in the 1960s and 1970s in 
favor of need-based scholarships, are now 
making their way back into education-policy debate. 
While merit scholarships remain controversial, evi-
dence from a program in Kenya suggests these 
scholarships can be an effective tool to raise both 
students’ and teachers’ efforts and to boost academic 
achievement.   
 
Here in the United States, a growing number of states, 
including Georgia, Michigan, New York, and Massa-
chusetts, now offer merit scholarships to college-
bound students who perform well academically. 
Many other countries have similar programs, some of 
which target younger students.  However, some edu-
cationalists oppose these kinds of scholarships on 
equity grounds, fearing that the benefits would 
mainly go to students from better-off families. Others 
argue that offering cash rewards for academic per-
formance could weaken students’ intrinsic motivation 
to learn or cause them to focus on prepping for tests 
at the expense of other dimensions of learning. 
 
Unfortunately, the nature of most existing U.S. merit 
scholarship programs makes it hard to find reliable 
evidence on how exactly these programs affect stu-
dents’ learning. Often it is difficult to identify an 
appropriate group of students who was not eligible 
for the program to compare with a group who was. 
Without a credible comparison group, we cannot eas-
ily differentiate between program effects and other 
confounding factors that may influence achievement 
in education.  
 
For example, one of the best existing sources of evi-
dence on merit scholarships in the United States is 
Georgia’s HOPE (Helping Outstanding Pupils Educa-
tionally) program, which awards in-state college 
scholarships to high school students who graduate with 
at least a B average. After the program was introduced 
in 1993, the average SAT score for Georgia high 
school seniors rose almost 40 points. But since all stu-
dents in the state were eligible, there was no reliable 
way of determining with certainty whether factors 
other than the scholarship also contributed to the rise. 
 
In order to approach this question more systematically, 
Edward Miguel, Rebecca Thornton, and I examined 
evidence from a merit scholarship program for pri-
mary-school girls in Kenya. In contrast to most U.S. 
programs, this one was phased into a number of 
schools in random order, allowing us to compare 
schools that were eligible for the program with similar 
schools where the scholarship had not yet been intro-
duced. That way, the differences in educational 
outcomes between the two groups of students could be 
attributed solely to the effect of the scholarship. Our 
survey included information on test scores, attendance, 
study habits, and students’ attitudes toward learning. 
 
EDUCATION IN KENYA  
 
Various school fees—levied to cover nonteacher 
costs such as textbooks, chalk, classroom repair, and 
other school expenses—have historically created a 
barrier to education in Kenya. When the program we 
studied was introduced in 2001–02, primary-school 
fees averaged approximately $6.40 per year per 
family (in 2003, the government abolished these 
fees). Families spent another $6 or so to provide each 
student in the household with a school uniform and 
other school supplies. In western Kenya—where 
annual per capita income is less than $1 a day—these 
are substantial expenses. 
 
The Kenya Certificate of Primary Education (KCPE), 
given in grade eight (the end of primary school), tests 
students’ knowledge in five subject areas: Swahili, Eng-
lish, geography and history, mathematics, and science. 
The results of the exam determine whether students are 
  
 
               Michael Kremer
In both Busia and Teso, ICS invited selected schools 
to participate in the program through random draws, 
similar to a lottery. In Busia, all schools invited to 
participate did so and, hence, the characteristics of 
program schools and comparison schools were bal-
anced. In Teso, some schools and individuals chose 
not to participate, and so the random allocation of 
invitations was not sufficient to ensure balanced pro-
gram and comparison groups, making it harder to 
draw inferences about the impact of the program. We 
focus below on the effects in Busia. 
admitted to secondary school and, if so, which schools 
will admit them—much as the ACT and SAT tests af-
fect admission to tertiary education in the United States 
In order to prepare for the KCPE, students typically take 
standardized exams at the end of each school year in 
grades four through eight. These preparation tests carry 
a financial cost; students pay roughly $1–$2, depending 
on the year, to sit for the exams. 
 
School-fee problems and the challenge of the place-
ment exam both contribute to the low number of 
students passing from primary school to secondary 
school. In the part of western Kenya we examined, 
drop-out rates climbed precipitously in grades five 
through seven; only one-third of the enrolled students 
ever finished primary school. Drop-out rates were 
especially high among teenage girls. 
 
RESULTS 
 
The randomized selection of treatment and control 
schools made it relatively easy and straightforward to 
get a reliable measure of the scholarship program’s 
impact. We simply needed to compare students’ test 
scores and other educational outcomes across the two 
groups of schools before and after the introduction of 
the scholarship. We made these comparisons over the 
two-year span of the program, first comparing stu-
dents who were in grade six in 2001, and then 
students who were in grade six a year later, in 2002.   
 
THE GIRLS’ SCHOLARSHIP PROGRAM 
 
In 2001, a Dutch nonprofit organization called Inter-
national Child Support (ICS) Africa began awarding 
scholarships to high-achieving, grade-six girls from 
Busia and Teso, two rural districts in western Kenya, 
for the next two academic years—that is, through the 
end of primary school. In order to win the award, 
girls had to score in the top 15 percent of the year-
end, grade-six exams within their district.  Each win-
ning girl received (a) a grant of $6.40, paid to the 
girl’s school to cover fees; (b) a grant of $12.80 for 
school supplies, paid directly to the girl’s family; and 
(c) public recognition at a school awards assembly.  
 
The test-score impact of the scholarship program was 
large and tended to spill over to other students who 
had little or no chance of winning the award. During 
both years of the program in Busia, girls’ test scores 
in scholarship schools improved markedly when 
compared to girls in control schools; test scores in-
creased by 0.29 standard deviations among grade-six 
girls in 2001, and they increased by 0.21 standard 
deviations among grade-six girls in 2002. These im-
provements are roughly equivalent to 0.2 grades of 
extra primary schooling. As expected, girls scoring 
just below the winning threshold on baseline exams 
showed the largest test-score gains. But there were 
also large improvements among girls who scored 
poorly on baseline exams and who were therefore not 
likely to win the award from the outset.  
 
The competition for scholarships took place across a 
large number of schools and among a large number 
of students, making it less likely that the program 
would undermine cooperation between students 
within schools and classrooms. During the first year 
of the scholarship, roughly 57 percent of the 63 pro-
gram schools had at least one winner, with an 
average of 5.6 winners in each of those schools.  Dur-
ing the second year, 70 percent of program schools 
had at least one winner.   
 
Test scores among boys, who were definitely 
ineligible to compete for the award, also improved.  
Boys’ test scores in Busia program schools increased 
over the two years by 0.13–0.21 standard deviations.  
As with the girls, boys at all levels of the original 
baseline distribution improved their scores, although 
the gains at the top of the distribution were somewhat 
more pronounced.  
 
Through several unannounced attendance checks 
each school year, ICS personnel administered 
questionnaires to students in grades five through 
seven, collecting information on study effort, habits, 
and attitudes toward school and schoolwork. These 
surveys also confirmed that most students were aware 
of the scholarship and understood who was eligible to 
receive the award. 
  
 
Motivation Matters: Merit Scholarships and Student Achievement               
Finally, these test-score gains also appear to have 
extended beyond the time students were eligible to 
win the scholarship. Data collected in 2002 from the 
original cohort of girls, then in grade seven, suggest 
that these gains were lasting and were not due to ex-
tra preparation sessions or cheating on the exam in an 
effort to win the award.   
 
One potential explanation for the broad improvement 
in test scores was the jump in student and teacher 
attendance rates in program schools. Student atten-
dance increased by as much as 5 percentage points 
for both girls and boys in Busia, equivalent to reduc-
ing absenteeism by almost one-third. At the same 
time, teacher absentee rates dropped by about 6 per-
centage points, an effect roughly as large as the 
attendance gains among students. The improvements 
in attendance were evenly distributed across each 
school year, indicating that these gains were not due 
to extra study sessions just before the exams. 
 
The large attendance gains in program schools among 
boys and girls with low baseline test scores immedi-
ately suggests that the rise in student effort (as 
measured by attendance) was not simply due to test 
preparation. Moreover, the higher teacher-attendance 
rates provide a plausible explanation for the positive 
spillover effects experienced by boys in Busia program 
schools: Any increase in teacher effort caused by the 
scholarship benefited the class as a whole.  
 
Moreover, we found little evidence to support the 
common criticisms of merit scholarships. Students 
did not appear to have spent more time cramming for 
exams or otherwise focusing on them at the expense 
of other aspects of learning. Nor did we find evidence 
to support the argument that external rewards like 
merit scholarships interfere with a student’s self-
esteem or motivation to learn. According to our sur-
vey results, students’ attitudes toward school and 
school work remained similar between program and 
comparison schools and between girls and boys. 
 
On the other hand, we did find that scholarship win-
ners came from somewhat more advantaged families 
than the other students in the sample.  Parents of 
scholarship winners, for example, had nearly three 
more years of schooling than parents of nonwinners 
(7.7 years compared to 4.8 years). However, there was 
no notable difference between winners and nonwin-
ners in terms of important household assets, such as 
iron roofs or latrines, and so there was no evidence 
that children from wealthier households were more 
likely to win.  
 
Finally, when compared to other randomized inter-
ventions conducted in the same region, it appears that 
the scholarship program was more cost-effective than 
alternative projects that supplied textbooks, flip-
charts, school uniforms, or offered performance-
based incentives to teachers. In terms of effective-
ness, the average test-score gain in merit scholarship 
program schools for female and male students in both 
Busia and Teso over the two years of the program 
was roughly 0.12 standard deviations; the comparable 
gain for schools participating in the teacher incentive 
program over two years was just 0.07 standard devia-
tions. The average gain for the textbook-program 
schools was only 0.4 standard deviations, while the 
flip-chart and the child-sponsorship programs (which 
provided the school uniforms) did not produce any 
statistically significant effects on test scores.  
 
In dollar terms, although the picture is a little less 
clear, the scholarship program was still the least ex-
pensive way to improve test scores. Using the 
average program impact for both Busia and Teso, the 
per-pupil cost of increasing test scores by 0.1 stan-
dard deviation was $1.41, the comparable cost of the 
teacher incentive program was $1.36, and the text-
book program $5.61. However, if we limit our 
analysis to Busia, where the girls’ scholarship pro-
gram was well received, the per-pupil cost of the 
program was only $0.75, far lower than any other 
program aimed at improving test scores. 
 
REFINING THE DEBATE 
 
While merit-based scholarships have re-emerged in 
recent years in the United States and elsewhere, we still 
have little evidence on precisely how these programs 
affect students’ learning. Critics have argued that such 
programs benefit only those students with a certain 
background, or that they improve education outcomes 
only over the short run, or that they cause students and 
teachers to concentrate on prepping for achievement 
tests rather than other important aspects of learning. 
 
However, evidence from the randomized evaluation 
we conducted in Kenya suggests that such programs 
can produce an environment where teachers and stu-
dents from all skill levels increase their effort, 
resulting in higher student academic achievement that  
 
                 Michael Kremer
is long-lasting. Introducing the scholarship in Kenya, 
moreover, did not appear to have any significant nega-
tive impact on students’ attitudes or desire to learn. 
 
Although we found evidence that students from more 
advantaged backgrounds (in this case, those whose 
parents had more schooling) gained most from the 
program, there may be ways to spread those benefits 
more widely. In the United States, one way to 
achieve this might be to limit merit scholarships for 
tertiary education to students from poor, or poorly 
performing, areas where the more disadvantaged stu-
dents would have a chance at winning an award.   
 
Finally, while most research on education focuses on 
the impact of additional material resources on student 
performance, the results of our study suggest that 
student motivation is a critical variable.   
 
ENDNOTE 
 
1  For more information on Kenya’s program, see 
“Incentives to Learn” by Michael Kremer, Edward 
Miguel, and Rebecca Thornton, National Bureau of 
Economic Research Working Paper. No. 10971, 
December 2004. www.nber.org/papers/w10971. 
 
 

Motivation matters: merit scholarships and student achievement

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Motivation matters: merit scholarships and student achievement

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Research Papers in Economics