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.

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Evidence snapshot | March 2022

Financial Incentives (660.07 KB)

Interventions with Financial incentives as the primary service

The table presents up-to-date information from Pathways Clearinghouse reviews, which may be more current than the information in the Evidence Snapshot.

Intervention Increase earnings Increase employment Decrease benefit receipt Increase education and training Populations and employment barriers Services Provided
California Work Pays Demonstration Project (CWPDP) Supported for increasing earnings Insufficient evidence to assess support for increasing employment No evidence to assess support for decreasing benefit receipt No evidence to assess support for increasing education and training Cash assistance recipients Financial incentives
Compass Family Self-Sufficiency (FSS) Program No evidence to assess support for increasing earnings No evidence to assess support for increasing employment No evidence to assess support for decreasing benefit receipt No evidence to assess support for increasing education and training Financial incentives, Financial education, Case management
Connecticut's Jobs First Program Supported for increasing earnings Supported for increasing employment Not supported for decreasing benefit receipt Insufficient evidence to assess support for increasing education and training Cash assistance recipients Work readiness activities, Training, Soft skills training, Sanctions, Financial incentives, Education, Job search assistance
Family Rewards Supported for increasing earnings Mixed support for increasing employment Supported for decreasing benefit receipt Insufficient evidence to assess support for increasing education and training Parents, Very low income Financial incentives
Family Rewards 2.0 Supported for increasing earnings Insufficient evidence to assess support for increasing employment Insufficient evidence to assess support for decreasing benefit receipt Insufficient evidence to assess support for increasing education and training Parents, Cash assistance recipients Supportive services, Financial incentives, Financial education, Case management
Family Self-Sufficiency (FSS) program Insufficient evidence to assess support for increasing earnings Insufficient evidence to assess support for increasing employment Insufficient evidence to assess support for decreasing benefit receipt No evidence to assess support for increasing education and training Financial incentives, Case management
Family Transition Program Supported for increasing earnings Supported for increasing employment Supported for decreasing benefit receipt No evidence to assess support for increasing education and training Parents, Single parents Work experience, Unpaid work experience, Work and work-based learning, Training, Supportive services, Sanctions, Case management, Health services, Financial incentives, Education, Child care
Health Profession Opportunity Grants (HPOG) 1.0—Noncash Incentives Insufficient evidence to assess support for increasing earnings Insufficient evidence to assess support for increasing employment Insufficient evidence to assess support for decreasing benefit receipt No evidence to assess support for increasing education and training Financial incentives
Minnesota Family Investment Program (MFIP) Insufficient evidence to assess support for increasing earnings Insufficient evidence to assess support for increasing employment Insufficient evidence to assess support for decreasing benefit receipt No evidence to assess support for increasing education and training Single parents, Parents, Cash assistance recipients Financial incentives, Education, Work readiness activities, Supportive services, Training, Sanctions
Minnesota Family Investment Program (MFIP) Incentives Only Insufficient evidence to assess support for increasing earnings Supported for increasing employment Insufficient evidence to assess support for decreasing benefit receipt No evidence to assess support for increasing education and training Single parents, Parents, Long-term cash assistance recipients, Cash assistance recipients Financial incentives, Supportive services