I remember reading this NBER paper and being struck by a number of things, first the conclusion by the author:
The leading theory is that students do not understand the educational production function and, thus, lack the know-how to translate their excitement about the incentive structure into measurable output.
It's easy for adults to see that the more used cars sold, the bigger check for the salesman. Students in the participating schools didn't understand how to sell the proverbial cars, this is the educational production function.
While this conclusion is interesting there was another idea that I found more important to note. Dallas second grade students were paid $2 for each book they read; eliminating one teacher at that grade level could pay for up to 75 books per student over the course of a year. With the changes in educational funding, funding sources and schools looking for new ideas I wonder if new teaching structures could be coming, and cost-effective.
incentives can be a cost-e!ective strategy to raise achievement among even thepoorest minority students in the lowest performing schools if the incentives are given for certaininputs to the educational production function. Paying students to read books yields a large andstatistically signiﬁcant increase in reading comprehension between .180 (.075) and .249 (.103) standard deviations, increases vocabulary between .051 (.068) and .071 (.093) standard deviations, andincreases language between .136 (.080) and .186 (.107) standard deviations. The estimated impactson vocabulary scores are not signiﬁcant; increases in language are marginally signiﬁcant. Similarly,paying students for attendance, good behavior, wearing their uniforms, and turning in their homework increases reading achievement between .152 (.092) and .179 (.106) standard deviations, andincreases mathematics achievement between .114 (.106) and .134 (.122) standard deviations
The choice between paying students to read books or a teacher to teach them only arises in economics research but is likely coming soon to the field of education as well