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Policy Brief 2011-07 POLICY BRIEF 2011-07 Public-Private Partnerships to The PowerRevamp and Pitfalls U.S. Infrastructure of Education Incentives SEPTEMBER 2011 POLICY BRIEF 2011-02 | MAY 2011 WWW.HAMILTONPROJECT.ORG ADVISORY COUNCIL GEORGE A. AKERLOF GLENN H. HUTCHINS The Hamilton Project seeks to advance Koshland Professor of Economics Co-Founder and Co-Chief Executive America’s promise of opportunity, prosperity, and University of California at Berkeley Silver Lake growth. ROGER C. ALTMAN JIM JOHNSON Founder & Chairman Vice Chairman Evercore Partners Perseus LLC We believe that today’s increasingly competitive HOWARD P. BERKOWITZ LAWRENCE KATZ global economy demands public policy ideas com- Managing Director Elisabeth Allison Professor of Economics mensurate with the challenges of the 21st Century. BlackRock Harvard University ALAN S. BLINDER MARK MCKINNON The Project’s economic strategy reflects a judgment Gordon S. Rentschler Memorial Professor Vice Chairman that long-term prosperity is best achieved by foster- of Economics & Public Affairs Public Strategies, Inc. Princeton University ing economic growth and broad participation in that ERIC MINDICH TIMOTHY C. COLLINS Chief Executive Officer growth, by enhancing individual economic security, Senior Managing Director Eton Park Capital Management and by embracing a role for effective government in & Chief Executive Officer Ripplewood Holding, LLC SUZANNE NORA JOHNSON making needed public investments. Former Vice Chairman ROBERT CUMBY Goldman Sachs Group, Inc. Professor of Economics Our strategy calls for combining public investment, Georgetown University PETER ORSZAG Vice Chairman of Global Banking a secure social safety net, and fiscal discipline. In JOHN DEUTCH Citigroup, Inc. Institute Professor that framework, the Project puts forward innovative Massachusetts Institute of Technology RICHARD PERRY Chief Executive Officer proposals from leading economic thinkers — based KAREN DYNAN Perry Capital on credible evidence and experience, not ideology or Vice President & Co-Director of Economic Studies PENNY PRITZKER doctrine — to introduce new and effective policy op- Senior Fellow, The Brookings Institution Chairman of the Board TransUnion tions into the national debate. CHRISTOPHER EDLEY, JR. ROBERT REISCHAUER Dean and Professor, Boalt School of Law University of California, Berkeley President The Project is named after Alexander Hamilton, the The Urban Institute MEEGHAN PRUNTY EDELSTEIN nation’s first Treasury Secretary, who laid the foun- Senior Advisor ALICE RIVLIN The Hamilton Project Senior Fellow & Director dation for the modern American economy. Hamilton Greater Washington Research stood for sound fiscal policy, believed that broad- BLAIR W. EFFRON at Brookings Founding Partner Professor of Public Policy based opportunity for advancement would drive Centerview Partners LLC Georgetown University American economic growth, and recognized that JUDY FEDER ROBERT E. RUBIN “prudent aids and encouragements on the part of gov- Professor of Public Policy Co-Chair, Council on Foreign Relations Georgetown University Former U.S. Treasury Secretary ernment” are necessary to enhance and guide market Senior Fellow, Center for American Progress DAVID RUBENSTEIN forces. The guiding principles of the Project remain Co-Founder & Managing Director ROLAND FRYER The Carlyle Group consistent with these views. Robert M. Beren Professor of Economics Harvard University and CEO, EdLabs LESLIE B. SAMUELS Partner MARK GALLOGLY Cleary Gottlieb Steen & Hamilton LLP Managing Principal Centerbridge Partners RALPH L. SCHLOSSTEIN President & Chief Executive Officer TED GAYER Evercore Partners Senior Fellow & Co-Director of Economic Studies ERIC SCHMIDT The Brookings Institution Chairman & CEO Google Inc. RICHARD GEPHARDT The Hamilton Project Update President & Chief Executive Officer ERIC SCHWARTZ A periodic newsletter from The Hamilton Project Gephardt Government Affairs 76 West Holdings THOMAS F. STEYER is available for e-mail delivery. MICHAEL D. GRANOFF Chief Executive Officer Senior Managing Member Subscribe at www.hamiltonproject.org. Pomona Capital Farallon Capital Management, L.L.C. ROBERT GREENSTEIN LAWRENCE H. SUMMERS Executive Director Charles W. Eliot University Professor Center on Budget and Policy Priorities Harvard University CHUCK HAGEL LAURA D’ANDREA TYSON The views expressed in this policy brief are not necessarily those S.K. and Angela Chan Professor of of The Hamilton Project Advisory Council or the trustees, officers Distinguished Professor Georgetown University Global Management, Haas School of or staff members of the Brookings Institution. Former U.S. Senator Business University of California, Berkeley MICHAEL GREENSTONE Copyright © 2011 The Brookings Institution Director The Power and Pitfalls A New Approach of Education Incentives With the attitude that anything and everything should be tried to help disadvantaged students learn the skills that could help bring them out of poverty, Brad Allan of EdLabs and Roland Parents may reward kids with an extra allowance or Fryer of Harvard University and EdLabs experimented with ice cream if they do their homework or spend a specified financial incentives for students, teachers, and parents in five cities across America and in schools with a high proportion of amount of time reading. Classroom teachers may offer economically disadvantaged students. Drawing on the results gold stars for high test grades or good behavior. For many of these experiments, they offer the following 10 Dos and children, incentives already play a role in education. At the Don’ts of Education Incentives: same time, America’s schools search for new approaches to boost student achievement. Despite this, most schools have 1. DO provide incentives for inputs, not outputs: Experiments showed that when students were paid for not tried to apply monetary incentives in any systematic way. grades or test achievement, there was no improvement. As the figure on the following page demonstrates, incentives In a new paper for The Hamilton Project, “The Powers and for inputs such as reading and math assignments were Pitfalls of Education Incentives,” Brad Allan and Roland much more effective than incentives for outputs or teacher Fryer offer advice on designing incentive programs for incentives. Conversations with students and parents children based on a number of experiments where they suggested that students wanted to improve but they did not provided incentives for grades and test scores, as well as know how. Students often tried to change their test-taking strategies rather than studying harder, and the initial for things such as doing homework, reading books, and excitement about the program faded when they saw that attending school every day. They argue that incentives have their grades were not improving. On the other hand, when some power to improve student achievement and outline the students were paid to read books or do math homework, critical elements of an incentive program. they read the books and found that their test scores also improved. 2. DO think carefully about what to incentivize: Although The Challenge students were excited about the incentive programs, this excitement did not translate into enthusiasm for other The United States is failing to educate its poorest, most aspects of school. Students did exactly what they were disadvantaged students. Black and Latino student performance incentivized to do and no more. If they were paid for on international assessments falls at around the same level as reading books, they read books. Only in cases where doing student performance in Mexico and Turkey. In every major these tasks helped them learn tested material did they show American city, over three-quarters of black or Latino eighth gains. The two input incentives that were effective were graders are below proficient levels in math or reading. paying to read books and paying students to work on math Prior attempts to raise the performance of disadvantaged problems designed to focus on individual problem areas. students have been largely unsuccessful. Per pupil spending Paying for general homework completion and behavioral increased from $5,200 in 1970 to $12,000 in 2007 without incentives did not lead to higher achievement even though any commensurate gains in student achievement. Similarly, students generally responded to the incentives. This teachers today are much more likely to have a Master’s degree, suggests teachers and parents need to think carefully but this has also failed to raise achievement. about what activities do lead to achievement gains and incentivize those actions. At the same time, we know that gains are possible. New charter schools like the Knowledge Is Power Program (KIPP) and the 3. DO align incentives: A student may have a hard time Harlem Children’s Zone have raised achievement by enough improving her grades on her own if her parents and teachers to halve the black-white achievement gap in three years. But are not similarly motivated. Incentives for teachers, only a small fraction of children can go to charter schools like parents, and students should complement each other, and these. Nor has their success shed any light on what existing progress is easier when two or even all three groups work schools can do to raise student achievement. together. One of the most successful incentive programs was in Houston where teachers, parents, and children were all paid for different roles in making sure kids did their math homework. The Hamilton Project • Brookings
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