Texas: Promise in Paying for Grades

As President Obama looks to overhaul education policy, he might consider a simple fix: paying students for grades. Backed by private donors, hundreds of schools nationwide have tried a pay-for--performance approach in the last decade. But even as the practice has spread, psychologists have attacked it as shortsighted, saying it doesn't cultivate a lifelong love of learning. Legislators, wary of the optics, have steered clear, citing the need for further research.

Now, in the first long-term study of its kind, a working paper published by the National Bureau of Economic Research may provide some answers. According to the report, Texas high-school students who earned cash for passing Advanced Placement exams showed not only better GPAs, but also bumps in college attendance, performance, and the likelihood of earning their degrees. The effects were most pronounced among minorities, with African--American students 10 percent more likely to enter college, and 50 percent more likely to persist through graduation. The cost of administering the program was minimal: an average of $200 per student (which included bonuses and operational expenses). "If you have a million dollars," says Cornell professor Kirabo Jackson, the study's author, this is "a pretty good way to spend it." It gives cool-minded kids an alibi for success, he adds: "I don't like math; I'm saving for an Xbox.' "

Of course, it also undercuts decades of education policy. No Child Left Behind focuses big bucks ($14 billion) on early intervention, while Race to the Top rewards states for boosting their kids' scores. If Jackson is right, however, much less money—late in the game, and paid to students directly—is the more effective path.