Economic Policy Review Executive Summary
Program Design, Incentives, and Response: Evidence from Educational Interventions
Recapping an article from the October 2010 issue of
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the Economic Policy Review, Volume 16, Number 2
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22 pages / 275 kb

Author: Rajashri Chakrabarti

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  • In response to widespread demands for the reform of K-12 education in the United States, policymakers have introduced vouchers—scholarships that make students eligible to transfer from public to private schools—in some U.S. school districts.

  • Chakrabarti analyzes two such educational interventions—the Milwaukee and Florida voucher programs—and explains that the different designs of the two programs have had different effects on public school incentives and performance.
  • Under the Milwaukee program, vouchers were imposed from the outset, so that all low-income public school students became eligible for vouchers to transfer to private schools.

  • In contrast, schools in the Florida program were first threatened with vouchers, with students of a particular school becoming eligible for vouchers only if the school received two “F” grades in a period of four years. Unlike the Milwaukee schools, threatened Florida schools had an opportunity to avoid vouchers.

    • Using data from Florida and Wisconsin, Chakrabarti shows that the threatened Florida public schools’ efforts to avoid vouchers resulted in performance effects that far exceeded those of comparable schools in Milwaukee’s program.

    • The study concludes that program design is critical: Policies that present failing public schools with functional and credible sanctions are best suited to produce the results intended by policymakers.

    • The lessons of the study are broadly applicable to New York City’s educational reform efforts: As in Florida’s program, public schools in New York face valid sanctions if they fail to perform; therefore, New York’s low-performing schools have an incentive to avoid sanctions, and one would expect them to respond as Florida’s schools have.

About the Author

Rajashri Chakrabarti is an economist at the Federal Reserve Bank of New York.
Disclaimer

The views expressed in this summary are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System.
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