The Pathways to Work Evidence Clearinghouse defines financial incentives as bonuses that clients receive for engaging in specific activities or achieving certain goals. This Evidence Snapshot describes the effectiveness of programs that were identified by the Pathways Clearinghouse as using financial incentives. It summarizes what we know about these programs and their impacts so TANF administrators, policymakers, researchers, and the general public can apply the evidence to questions and contexts that matter to them.
Key Findings and Highlights
On average, interventions that use financial incentives improved outcomes, especially earnings and employment. In particular, for intervention participants -- as compared with comparison groups that did not receive intervention services --
- Short-term annual earnings increased by $1,092, and long-term annual earnings increased by $858, on average, across the 15 financial incentive interventions for which these outcomes were examined.
- Short-term employment increased by 3 percentage points and long-term employment increased by 2 percentage points, on average, across the 15 financial incentive interventions for which these outcomes were examined.
- The proportion of individuals receiving public benefits decreased by 1 percentage point in the short term and 3 percentage points in the long term, and the amount of public benefits received increased by $161 in the short term but decreased by $86 in the long term, on average, across the 11 financial incentive interventions for which these outcomes were examined.
- Education and training attainment increased by 2 percentage points, on average, across the five financial incentive interventions for which this outcome was examined.
- Five financial incentive interventions improved more than one type of outcome.
Citation
Stein, Jillian, and Dana Rotz (2022). Evidence Snapshot: Financial incentives, OPRE Report #2022-41, Washington, DC: Office of Planning, Research, and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services.