An Incentives-Based Approach to Implementing Financial Fitness for Life in the Milwaukee Public Schools
Butt, Nicole M., Haessler, Stephen J., Schug, Mark C., Journal of Private Enterprise
This paper reports on the research aimed at measuring the effect of financial incentives provided to teachers in implementing a financial and economic education curriculum in a large urban school district. The initiative involved paying teachers to attend a two-day training program and to allow their students to be pre- and post-tested using a national, standardized test. The testing was conducted to provide empirical evidence regarding the implementation of the curriculum. The statistical analysis of the pre-and post-test scores revealed that students' knowledge gains were statistically significant and that they significantly outperformed students who did not participate in the program.
JEL Codes: A2, A29, D73
Keywords: Economic education, Financial education, Incentives
The proposition that people respond to incentives in predictable ways is not very controversial among most economists. In public education, however, the role of incentives has been hody debated.
This paper reports on research aimed at measuring the effect of incentives in implementing a financial and economic education curriculum published by the National Council on Economic Education called Financial Fitness for Life (FFL) (Flowers & Szot Gallaher, 2001) in the Milwaukee Public Schools (MPS). The MPS had adopted this curriculum for use in its seventh grade social studies program in 2004, and although the materials were purchased and teachers were trained, very few teachers actually implemented the program. With help from the Northwestern Mutual Foundation, it was decided that, with most principals and grade seven teachers seemingly ignoring central office policy, perhaps a voluntary, incentives-based approach would work better. The new initiative involved paying MPS teachers to attend a two-day training program and to allow us to pre-and post-test their students using a national, standardized test of financial and economic understanding developed for this curriculum. The testing was conducted to provide empirical evidence regarding the implementation of the curriculum. The statistical analysis of the pre-and post-test scores revealed that students' knowledge gains were statistically significant and that they significantly outperformed students who did not participate in the program.
Thus, the primary research question in this study was: Would the addition of incentives in the form of bonus payments to teachers result in the voluntary implementation of an economic and personal finance curriculum in an urban school district in which previous efforts had failed?
II. Related Research
What is the role of incentives in education? Do different forms of compensation matter? The landmark Coleman Report (Coleman, Campbell, Hobson, McPartland, Mood, Weinfield and York, 1966) implied that school governance matters such as incentives and teacher effort may have little effect on academic achievement. It concluded that students' family backgrounds trumped all other variables in terms of school outcomes. One inference was that poverty and ethnicity exerted a powerful effect on academic achievement. Family background and neighborhood environment mattered more than school governance or teacher effort.
The Coleman Report (Coleman, Campbell, Hobson, McPartland, Mood, Weinfield and York, 1966) touched off a debate. Educational researchers and economists disagreed on the role of incentives in education. Studies of teacher incentives appear to fall into two groups. The first group includes advocates for alternative forms of teacher compensation to reward performance. This group offers little empirical support for its claims (Odden and Kelly, 2002). The second group seeks to verify or refute the research of Eric Hanishek's controversial finding that "money doesn't matter" in evaluating the impact of teacher compensation on student performance (Hanushek, Kain, and Rivkin, 1999). …