Financial Incentives Can Improve Public Sector Performance
Aug 9, 2010
Performance-Based Accountability Systems for Public Services
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Performance-based accountability systems (PBASs), which link incentives to measured performance as a means of improving services to the public, have gained popularity. While PBASs can vary widely across sectors, they share three main components: goals, incentives, and measures. Research suggests that PBASs influence provider behaviors, but little is known about PBAS effectiveness at achieving performance goals or about government and agency experiences. This study examines nine PBASs that are drawn from five sectors: child care, education, health care, public health emergency preparedness, and transportation. In the right circumstances, a PBAS can be an effective strategy for improving service delivery. Optimum circumstances include having a widely shared goal, unambiguous observable measures, meaningful incentives for those with control over the relevant inputs and processes, few competing interests, and adequate resources to design, implement, and operate the PBAS. However, these conditions are rarely fully realized, so it is difficult to design and implement PBASs that are uniformly effective. PBASs represent a promising policy option for improving the quality of service-delivery activities in many contexts. The evidence supports continued experimentation with and adoption of this approach in appropriate circumstances. Even so, PBAS design and its prospects for success depend on the context in which the system will operate. Also, ongoing system evaluation and monitoring are integral components of a PBAS; they inform refinements that improve system functioning over time.
A Historical Perspective on Performance-Based Accountability Systems
Problem Recognition and Adoption
The Design of an Incentive Structure to Motivate Behavioral Change
The Design of Measures That Link Performance to Incentives
Implementation and Monitoring
Effectiveness of Performance-Based Accountability Systems
Motivating and Improving System Evaluation
The Five Sectors
Designs for Evaluation
The research described in this report was conducted within RAND Education, a unit of the RAND Education, under a grant from a private philanthropic organization.
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