Cash Talks

A generation of reforms–including more school resources and new curricula–has failed to improve urban schools. In Oakland, Calif., near where I live, 20% of high school students drop out. Only a third meet the minimum requirements for entrance to the California state university system. The dropout problem is especially severe among African-American and Latino high school students, who are twice as likely to drop out as other students.

School vouchers are seen as a way to bring market competition into this stagnant sector of the economy. But results from early voucher reforms are mixed, and these programs continue to face challenges in the courts and state legislatures.

There is another way to bring competition into the classroom: Provide incentives to students in the form of cold cash. Adolescents often have extremely high rates of time discounting; in other words, they respond strongly to immediate punishments and rewards but do not adequately take into account the longer-term ramifications of their actions. For many adolescents the promise of a better job and higher future wages is not enough to motivate them to study today–but a $100 cash award for doing well on a standardized exam might do the trick.

Incentives to Learn: Merit Scholarships That Pay Kids to Do WellEducation Next
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Incentives to LearnPublished PaperAfrican DevelopmentHealthEducation and Human Capital2009
Go to Incentives to Learn