Journal of Economic Perspectives
In recent years, most states have constructed elaborate accountability systems using school-level test scores. However, because the median elementary school contains only 69 children per grade level, such measures are quite imprecise. We evaluate the implications for school accountability systems. For instance, rewards or sanctions for schools with scores at either extreme primarily affect small schools and provide weak incentives to large ones. Nevertheless, we conclude that accountability systems may be worthwhile. Even in states with aggressive financial incentives, the marginal reward to schools for raising student performance is a small fraction of the potential labor market value for students.
Kane, Thomas J. and Staiger, Douglas O., "The Promise and Pitfalls of Using Imprecise School Accountability Measures" (2002). Open Dartmouth: Faculty Open Access Articles. 2441.