Incentive Problems in University Education

This blog post is inspired by the very boring lecture I've had to attend all semester.

While I am interested in all the modules I take this year (I picked them, after all) I don't have nearly enough time to spend on each one. As I try to allocate my time between the modules this year I can tell that I spend more time on some modules than others. Part of the reason for this is that some modules are simply better than others. But why?

Disclaimer: The following framework is pushing it a little bit because in the first bit I implicitly assume that lecturers care about students' final grades. This might not be the case but bare with me, because as will be revealed later in this post, it may be beneficial to the university experience if lecturers were invested in grade outcomes, too.

In our model set up, we have students and lecturers/course convenors. For each module, students can decide whether to put in a lot of effort (study a lot) or very little effort (do the bare minimum). Students care about the final grades they get but all else equal students will prefer to put in only a little effort. This means if students can get the same grade regardless of how much effort they put in, they will prefer to only do the minimum amount required.

On the other side, we have the course convenors/lecturers. They care about the final outcomes (grades) in the modules they design. Lecturers want students to exert high effort because studying a lot will increase the probability of students doing well in the exam. Maybe lecturers care about students' grades because they care deeply about our learning experiences, or maybe they get some kind of reward if students perform well in their exams.* Students are scarce on time which means that they can't spend a lot of effort (or time) on each module. Lecturers only observe the final results (good grade/bad grade) which doesn't necessarily tell them about the students' effort. This is because putting in a lot of effort only increases the probability that students do well in the exam. You might study a lot but on the day of the exam, you have a terrible headache so that you can't remember any of the course material. On the other hand, you might not study at all but the exam is multiple choice and through some miracle, you get all the answers right. The point here is that studying a lot will only increase the probability that you do well, it doesn't guarantee it. Overall, this means that lecturers want students to study a lot for their module to increase the probability of good grades. For example, Emma who teaches Microeconomics wants students to study the most for Microeconomics to increase the probability that they get good grades.

How can she do this? As we know by now, economics is all about incentives. What the lecturers will try to do is design their module in a way that is incentive compatible. This means course convenors will want to incentivize students to spend a lot of effort on their module. How could they do this?

1. They could make the module and lectures really exciting!
This would require more effort from the lecturers' side, but a well-designed module will always be preferred by students. If you explain concepts clearly, design interesting lectures with real-world examples, students might naturally prefer to study more for your module simply because it's more fun.

2. Weekly test
This one's a bit on the mean side, but it gets the job done. Instead of trying to make your module more fun you could incentivize students to study by holding weekly (or bi-weekly) tests on the material. Because students care about their grades to some degree, they will study the material every week to do well in the test. It is also less effort to revise material each week than it is to revise a semesters' worth of lectures the week before the exam. Again, this comes at a higher cost to the lecturers because they have to write and mark the tests (or they get the teaching assistants to do this).

It would be great if lecturers actually did these things because entertaining lectures and well-designed modules are more fun, and while weekly tests might be a pain, it will make revision before the exam easier. So, why don't all lecturers do this?** These things require effort, and apparently, not all lecturers are willing to put in that extra effort. There definitely are some lecturers who actually do care about these things and design great modules. Yet, it might be interesting to see what would happen if the university incentivized lecturers to care about grades, too.

The interested reader might have noticed that this is actually what the professionals call a double-incentive problem***. The incentive problem exists between the lecturers and students but there is a second one! To get lecturers to care about students' grades, the university needs to incentivize them to do so.****

* This, of course, assumes that they can't just design really easy exams but instead the only way to achieve this is by getting students to study for the module
** In other words: Why do I have to sit through two hours of boring formulas and terrible lecture design every week?
*** This is a joke, only I call it that
**** I don't know how lecturers' contracts are designed, maybe they already include something like this

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