1. Eric P. Bettinger PAYING TO LEARN: THE EFFECT OF FINANCIAL INCENTIVES ON ELEMENTARY SCHOOL TEST SCORES

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 1 st -6 th 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 Y ijkt =a+b*Treat ijkt +grade k +school j +time t +e ijkt 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