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Insights of a Nobel Prize winner on education


The Nobel Prize in Economic Science was awarded to Abhijit Banerjee, Esther Duflo and Michael Kremer for their pioneering work involving randomized controlled experiments in development economics. The award provided a boost of support for the “randomistas” during a time when randomized controlled trials are being questioned in development policy and education.

Abhijit Banerjee, one of the three winners of the 2019 Nobel Prize in Economics, waits to speak at a news conference at MIT. REUTERS/Brian Snyder

While the prize was awarded in economics, there are two education studies by Kremer worth highlighting. One involved a study of Colombia’s Programa de Ampliación de Cobertura de la Educación Secundaria (PACES), an initiative that provided over 125,000 students with vouchers covering half the cost of private secondary school. The use of lotteries to award the vouchers gave researchers the chance to approximate a randomized trial experiment.

Researchers found that winners of the lotteries were 10 percentage points more likely to have finished eighth grade, repeated fewer grades, and scored 0.2 standard deviations higher on standardized achievement tests. The program also increased secondary school completion rates by 15 to 20 percent.

One common critique of voucher programs is that they don’t cover the full cost of tuition and therefore don’t offer families real choices. But this study found that offering vouchers to families actually increases their spending on education:  

On the other hand, voucher winners who were induced to switch from public to private schools greatly increased their educational expenditure, since the voucher covered only about half the cost of private school. On balance, winners’ gross school fees exceeded those of losers by about 70 percent of the amount they received from the voucher.

In addition to the voucher study, Kremer was also part of a research team that explored the role of teacher incentives in Kenya. In this program, teachers in grades four through eight received bonuses representing approximately 43 percent of a typical monthly salary based on the performance of the school as a whole on tests.

Researchers found that the incentives boosted test scores but not long term outcomes:

During the life of the program, students in treatment schools were more likely to take exams, and scored higher, at least on some exams. An examination of the channels through which this effect took place, however, provides little evidence of more teacher effort aimed at preventing dropouts or increasing long-run learning. Dropout rates did not fall, teacher attendance did not improve, homework assignment did not increase, and pedagogy did not change. There is, however, evidence that teachers increased efforts to increase the number of pupils taking tests in the short run and to raise short-run test scores. Conditional on being enrolled, students in treatment schools were more likely to take tests, and teachers in treatment schools were more likely to conduct test preparation sessions. While students in treatment schools scored higher than their counterparts in comparison schools during the two years that the program operated, they did not retain these gains after the end of the program, consistent with a model in which teachers focused on manipulating short-run scores.

So that’s partially good news! Teachers respond to incentives. Unfortunately, the incentives were built only around short-term outcomes. While the study took place in Kenya, education policy in the United States is also struggling to identify the right kinds of incentives with the right kinds of goals for accountability systems and teacher evaluation programs. More R&D will be needed around new measures and systems of student long-term success to help better align system incentives. 

Vouchers and teacher incentives are two strategies that American policymakers have used to improve education. Kremer’s work teaches us important lessons about the effectiveness of these policies and their limitations: vouchers increase academic achievement, even when families still have some out of pocket expenses. And while incentives can be effective, the way they are designed can lead to teachers focusing on short-term outcomes that ultimately don’t matter much for students.