The Hamilton Project

The Power and Pitfalls of Education Incentives

ABSTRACT

There is widespread agreement that America’s school system is in desperate need of reform, but many educational interventions are ineffective, expensive, or difficult to implement. Recent incentive programs, however, demonstrate that well-designed rewards to students can improve achievement at relatively low costs. Fryer and Allan draw on school-based field experiments with student and teacher incentives to offer a series of guidelines for designing successful educational incentive programs. The experiments covered more than 250 urban schools in five cities and were designed to better understand the impact of financial incentives on student achievement. Incentives for inputs, such as doing homework or reading books, produced modest gains and might have positive returns on investment, and thus provide the best direction for future programs. Additionally, this paper proposes directions for future incentive programs and concludes with implementation guidelines for educators and policymakers to implement incentive programs based on the experiments’ research findings and best practices. Incentive programs are not enough to solve all the problems in America’s educational system, but they can definitely play a role in the larger solution.