Working Paper #16
Education Impact Bonds: Picking Low-Hanging Fruit or Reaching for the Stars?
Impact bonds, a mechanism with the potential to improve and generate more financing towards educational outcomes, have gained traction over the past 15 years; however, empirical evidence regarding their use remains limited. This paper intends to contribute to this knowledge gap by examining the intended impact of education impact bonds (EIBs), which tie the achievement of predetermined targeted results to outcome payments. The analysis addresses critiques that navigating the diverse motivations of different stakeholders may result in concentrating on low-hanging fruit (setting easy-to-achieve targeted results), increasing the risk of perverse incentives and simplifying complex educational challenges.