There is a growing interest among policy makers and education researchers in the effectiveness of incentive payments as a means for improving educational outcomes. Over the last decade, various field experiments were implemented in the U.S. and in other countries to evaluate the impact of incentives provided to students and/or to teachers based on student test score performance.
The effects of incentive programs have usually been found to be modest, regardless of whether the student or teacher receives the incentive. The Behrman et. al. (2011) study is an exception. That study analyzes a three-year field experiment conducted by the Mexican Ministry of Education in 88 Federal high schools. The experiment found no statistically significant effects of offering incentive payments to the teachers alone, but large and statistically significant effects of offering incentives only to students and a still larger effect of offering the payments to both the students and teachers.
A question in implementing any incentive system is how to optimally design the system, whether it is optimal to reward teachers, students or both and by how much. A limitation of field experiments is that they are only informative about the effects of incentive schemes implemented and not about alternative designs. A key question raised by the Mexican experiment, for example, is why teacher incentives were only effective in combination with student incentives, whereas student incentives were also effective on their own.
This research develops and implements a framework for studying the mechanisms underlying the experimental effects and for analyzing alternative incentive designs. To this end, the project develops a model of student achievement in which students and teachers make effort decisions that affect learning outcomes. These choices, along with other teacher and student characteristics, jointly determine test score outcomes. The model can explain the pattern of incentive effects found in the Mexican program.
