`Membership Has Its Privileges': Status Incentives and Categorical Inequality in Education

Prizes - formal systems that publicly allocate rewards for exemplary behavior - play an increasingly important role in a wide array of social settings, including education. In this paper, we evaluate a prize system designed to boost achievement at two high schools by assigning students color-coded ID cards based on a previously low stakes test. Average student achievement on this test increased in the ID card schools beyond what one would expect from contemporaneous changes in neighboring schools. However, regression discontinuity analyses indicate that the program created new inequalities between students who received low-status and high-status ID cards. These findings indicate that status-based incentives create categorical inequalities between prize winners and others even as they reorient behavior toward the goals they reward.