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Incentives, incentives

Justin Bowen comments at EconTalk and points readers to an analysis of special education showing the power of incentives. Forster and Greene argue (see here, here and here) that in states where there is a per pupil subsidy to kids with disabilities, schools in such states find a lot more disabilities. I am not surprised.

Some of the findings:

  • There is a statistically significant positive relationship between
    bounty funding systems and growth in special education enrollment.
    Bounty funding results in an additional enrollment increase of 1.24
    percentage points over ten years.
  • The
    effect of the bounty system accounts for 62% of the enrollment growth
    experienced by bounty states during the study period. This represents
    roughly 390,000 extra students in special education, resulting in
    additional spending of over $2.3 billion per year.


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