Recruitment seminar. 

Abstract: This paper reports on the first large-scale randomized field experiment (which includes 14,190 undergraduate students)  involving legally-recognized minorities, to examine the causal effects of providing performance-based financial incentives to disadvantaged students on high stakes university test scores. Two definitions of being disadvantaged are examined separately: 1) income disadvantage 2) social disadvantage of belonging to minority groups, i.e., the lower caste groups. The aim of the paper is to measure the impact of two types of affirmative action policies on the disadvantaged groups that the policies target and on the excluded relatively advantaged peers. When only poor students were given the opportunity to win the prize incentives, the average test scores of the whole cohort decreased by .14 standard deviations. There is a negative spillover effect on the test scores of the nonpoor peers who are excluded from the opportunity to win the prize incentives. Mechanisms of academic noncooperation as a response to preferential policies are explored. The paper provides evidence of social tension and consequent non-cooperation among peers when only poor students are incentivized and the majority of the peers, who happen to be nonpoor, are excluded.