Should aid reward performance?

Chris Blattman links to a list of new and interesting papers on field experiments on governance and politics. 

Among the papers it is this one: "Should Aid Reward Performance? Evidence from a field experiment on health and education in Indonesia." 

Abstract: This paper reports an experiment in over 3,000 Indonesian villages designed to test the role of performance incentives in improving the efficacy of aid programs. Villages in a randomly-chosen one-third of subdistricts received a block grant to improve 12 maternal and child health and education indicators, with the size of the subsequent year’s block grant depending on performance relative to other villages in the subdistrict. Villages in remaining subdistricts were randomly assigned to either an otherwise identical block grant program with no financial link to performance, or to a pure control group. We find that the incentivized villages performed better on health than the non-incentivized villages, particularly in less developed provinces, but found no impact of incentives on education . . . 

The authors conclude:

In sum, the evidence presented here suggests that properly designed, performance based incentives can be a useful addition to aid programs. We found that adding performance incentives increased health outcomes, particularly in poorer areas with worse performance at baseline. Though the gains from incentives were modest, we found little downside from the incentives.

I have not read the paper entirely but is intriguing that performance incentives worked for health but did not for education outcomes.