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Can immediate rewards for good grades boost student performance? That's what a new study revealed. According to research done at the University of Chicago and published by the National Bureau of Economic Research, test performance can improve dramatically if students are offered rewards just before they are given standardized tests and if they receive the incentive immediately afterward.

And while educators disagree with the value of financial and other rewards as incentives, but a series of experiments involving 7,000 students in Chicago-area public schools showed that with the right kind of rewards, students achievement improved by as much as six months beyond what would be expected. The experiments were done on students taking relatively short, standardized diagnostic tests given three times a year to determine their grasp of mathematics and English skills

Researchers used financial rewards to boost performance for older students and non-financial rewards, such as trophies, to improve performance among younger students.

Researchers found that students had a stronger desire to do well on tests if they were promised a reward after their test. Students who were given money or a trophy to look at while they tested performed better.

Lead author of the study Sally Sadoff said timeliness is a key factor.

"Most importantly, all motivating power of the incentives vanishes when rewards are handed out with a delay," Sadoff said in a news release. 

Researchers concluded that if given nonfinancial rewards, elementary school students responded more to incentives than high school students. Trophies were given to those students because they are responsive to non-monetary rewards than older students.

As it relates to high school students, money mattered. Students performed better if offered $20 rather than $10.

"At Bloom Township High School, when we offered students $20 incentives, we found that their scores were 0.12 to .20 standard deviation points - five to sixth months in improved performance - above what we would otherwise have predicted given their previous test scores," Sadoff said.

The students tested had low initial motivation to do well, and so benefited from the rewards. Once the incentives were discontinued, follow-up tests showed no negative impact on successive tests.

The findings from the study help educators and administrators better understand the role of rewards in school performance

"The effect of timing of payoffs provides insights into the crux of the education problem that we face with our urban youth," the authors write. "Effort is far removed from the payout of rewards, making it difficult for students to connect them in a useful way. The failure to recognize this connection potentially leads to dramatic under-investment," as students fail to apply themselves and policymakers don't realize the students' full potential.