In the past week the Department of Education has clamped down on one sort of incentive for enrolling students in college and increased support for another. Taken together, the two moves make we wonder whether incentives are better at the individual or organizational level.
In this "Dear Colleague" letter, the Department of Ed ruled that it is improper for colleges and universities to provide financial incentives to employees for recruiting and enrolling students. Among the activities that cannot be incentivized are:
Targeted information dissemination to individuals; Solicitations to individuals; Contacting potential enrollment applicants; aiding students in filling out enrollment application information (p.8)
These rules, and others related to financial aid in the same document are a response to a scandal that blew up a couple years ago in which ethical lapses in providing financial aid grew out of cozy relationships between financial aid officers and private lenders.
Four days after offering this guidance, Ed announced a competition for nearly 200 million dollars in grants to encourage colleges and universities to enroll, retain, and graduate more students from college. The NYTimes article announcing the grant was called, "Incentives Offered to Raise College Graduation Rates."
In noting the almost-simultaneous banning and encouraging of incentives I am not trying to make a point about inconsistency in the Department of Education. Instead I am wondering about the proper location of incentives.
Some recent work by Dan Pink and separately by Barry Schwartz argues that incentives are relatively ineffective at getting individuals to behave well over an extended period of time. At the same time, donors are offering ever larger prizes to organizations that can solve problems, be it creating a privately funded space ship or raising high school graduation rates.
One wonders, then, about what incentives do for organizations that they do not do for individuals. Are organizations more likely to behave ethically with incentive money than individuals? Do incentives to organizations lead to sustainable changes in behavior when they do not for individuals? (Here the evidence would seem to say no, at least as indicated by the number of good educational innovations that disappear as soon as outside funding disappears.) Is the impact of incentive money weakened in organizations since it is distributed broadly, while it is focused in individuals? And finally, can donors and funders expect that incentives will bring about the sort of changes they hope to see?