Loss Aversion and Student Achievement

We conduct a field experiment to test if loss aversion behavior can be exploited to improve student performance in an undergraduate statistics course. In one treatment (gains), student grades were reported as points gained, and in the other treatment (losses) grades were reported as points lost. When controlling for other factors that affect student performance, we find that students in the loss treatment earned statistically higher grades than students in the gain treatment. Although preliminary, the results suggest that a simple manipulation of how grades are framed in the classroom can be a costless way to exploit loss aversion behavior and lead to higher student achievement.