Pallais, Amanda. 2009. “Taking a Chance on College: Is the Tennessee Education Lottery Scholarship Program a Winner?” Journal of Human Resources 44(1): 199–222.
Most policies seeking to improve high school achievement historically either provided incentives for educators or punished students. Since 1991, however, over a dozen states, comprising approximately a quarter of the nation’s high school seniors, have implemented broad-based merit scholarship programs that reward students for their high school achievement with college financial aid. This paper analyzes one of these initiatives, the Tennessee Education Lottery Scholarships, using individual-level data from the ACT exams. The program did not achieve one of its stated goals, inducing more students to prefer to stay in Tennessee for college, but it did induce large increases in performance on the ACT. Policies that reward students for performance do affect behavior and may be an effective way to improve high school achievement.
Amanda Pallais is a graduate student at the Massachusetts Institute of Technology. The author would like to thank Josh Angrist, David Autor, Esther Duflo, Amy Finkelstein, Bill Johnson, two anonymous referees, participants at MIT’s labor lunch and the 2006 European Science Days and especially Sarah Turner for their many helpful comments and suggestions. She is also grateful to Jesse Rothstein, Princeton University, James Maxey, and the ACT Corporation for allowing her access to the data and Robert Anderson, Erin O’Hara, David Wright and the Tennessee Higher Education Commission for providing summary statistics about the Tennessee Education Lottery Scholarship winners. The ACT data used in this paper were obtained from the ACT Corporation through an agreement with Princeton University. Though restricted by confidentiality agreements from sharing the data, the author is willing to advise other researchers about the steps towards acquiring these proprietary data.