Efforts to improve education in the U.S. has included financial incentives for high-performing teachers and programs have targeted middle- and high-school students, but a recent study found success in giving money to kids as young as third grade who scored well on standardized tests.
In a paper published by the National Bureau of Economic Research titled "Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores" Eric P. Bettinger of the Stanford School of Education looks at a program in the poor, Appalachian community of Coshocton, Ohio.
The pay-for-performance plan targeted third through sixth graders who took standardized tests in math, reading, writing, science, and social studies. The students could earn up to $100 -- $20 per score of Advanced in each test. Students who scored proficient were awarded $15 per test. In order to make sure the proceeds went directly to the students, payment was made in "Coshocton Children's Bucks," which could only be redeemed by kids for children's items. Participation in the program was randomized based on a lottery as specified by Robert Simpson, a local factory owner, who financed the effort.
The program showed generally positive results, with the biggest gains coming in math. Students who were eligible for the payments improved about 0.15 standard deviations, a statistically significant result. Though there were small improvements shown for other subject areas, the difference wasn't statistically significant.
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