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Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores

Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores. Eric P. Bettinger. Background. Short-run stimuli In 1820, New York City introduced a system of financial rewards for student performance Ex: (Pizza Parties, Visits to museums, etc.)

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Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores

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  1. Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores Eric P. Bettinger

  2. Background • Short-run stimuli • In 1820, New York City introduced a system of financial rewards for student performance • Ex: (Pizza Parties, Visits to museums, etc.) • Israel, 1999: Provided cash payments to high school students who took high school completion exams. Paid for participation and performance.

  3. Examples • Educational Maintenance Allowance (EMA) • College students in United Kingdom • Thirty pounds a week • Kenya implemented a program focused on female students • Large, positive impacts • Kremer, Miguel and Thorton (2008)

  4. Coshocton Incentive Program • Eastern Ohio • High unemployment, low manufacturing and agriculture wages • Average income: $24,000 • 94% White • 55% of students qualify for free/reduced lunch. • Poor performance lead to the state of Ohio threatening to intercede and take-over the schools

  5. Methodology • Panel data consisting of randomly chosen students from 1st-6th grade starting in 2002-2003 and going through 2006-2007 • Chosen through lottery • Children paid in “Children Bucks” • Only redeemable for children items • Accepted at every store in Coshocton • Ensured the rewards were being spent on the children

  6. Methodology cont. • Simple Regression model • Yijkt=a+b*Treatijkt+gradek+schoolj+timet+eijkt • i=student • j=school • k=grade • t=time • Grade, school and time are fixed control effects • Augmented model includes student covariates: age, gender, race, free/reduced lunch status, and previous year test scores.

  7. Results: Math

  8. Results: Reading

  9. Intrinsic v Extrinsic Motivation • Potential impact on intrinsic motivation • Inhibits intrinsic motivation: (Lepper & Greene 1978, Cameron &Pierce 2002, and countless more) • Participation versus Performance (Cameron and Pierce 2002) • Nature of Reward (unexpected versus expected)

  10. Inconclusive Effects • Gender • Spillover • Multi year Treatment and Year After Effects

  11. Conclusion • Results positive and significant in Math • Not significant in reading, social science, or science • Main Problem: No way of telling if the incentives effected students, parents or teachers • $100 Wallpaper • “Show me the money!” • Insignificant year-after effects suggest no long-run effects

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