Conditional cash penalties in education: Evidence from the Learnfare experiment

Wisconsin's influential Learnfare initiative is a conditional cash penalty program that sanctions a family's welfare grant when covered teens fail to meet school attendance targets. In the presence of reference-dependent preferences, Learnfare provides uniquely powerful financial incentives for student performance. However, a 10-county random-assignment evaluation suggested that Learnfare had no sustained effects on school enrollment and attendance. This study evaluates the data from this randomized field experiment. In Milwaukee County, the Learnfare procedures were poorly implemented and the random-assignment process failed to produce balanced baseline traits. However, in the nine remaining counties, Learnfare increased school enrollment by 3.5 percent (effect size = 0.08) and attendance by 4.5 percent (effect size = 0.10). These results suggest that well-designed financial incentives may be an effective mechanism for improving the school persistence of at-risk students at scale.

► Wisconsin's seminal Learnfare program sanctioned family welfare grants when covered teens failed to meet school-attendance targets.
► This unique incentive program leveraged loss aversion and targeted attendance, not test scores or grades.
► An earlier random-assignment evaluation suggested that Learnfare was ineffective.
► The original evaluation did not correct for the non-random attrition or randomization failure.
► This econometrically themed reanalysis indicates Learnfare generated cost-effective, statistically significant attendance increases.