Vertical versus Horizontal Incentives in Education: Evidence from Randomized Trials

This paper describes randomized field experiments in eighty-four urban public schools in two cities designed to understand the impact of aligned incentives on student achievement. In Washington DC, incentives were “horizontal” – provided to one agent (students) for various inputs in the education production function (i.e. attendance, behavior, interim assessments, homework, and uniforms). In Houston, TX, incentives were “vertical” – provided to multiple agents (parents, teachers, and students) for a single input (math objectives). On outcomes for which we provided direct incentives, there were large and statistically significant effects from both treatments. Horizontal incentives led to increases in math and reading test scores. Vertical incentives increased math achievement, but resulted in decreased reading, science, and social studies test scores. We argue that the data is consistent with agents perceiving academic achievement in various subjects as substitutes, not complements, in education production.