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The power and pitfalls of education incentives

September 27, 2011

The Problem

Despite decades of concerted effort and targeted funding, the United States is failing to educate its poorest and most-disadvantaged students. Some charter school programs have minimized the performance gap with financial incentives to students, yet these approaches have not been applied across public schools.

The Proposal

While not a panacea, well-designed student incentive programs should be incorporated more broadly to support and motivate disadvantaged students. Recommendations for development and implementation include providing incentives for inputs such as homework completion that are under the students’ control, ensuring that students and parents understand the programs, establishing structures that foster communication and responsibility, creating suitable payment protocols, collecting and analyzing data, and building a culture of success.


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.