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We review a range of education policy instruments receiving attention in recent years and the assumptions underlying them, and examine what we know about their effects. The instruments we review fall under two categories: market-based reforms, specifically vouchers, tuition tax credits, and charter schools; and accountability- or incentive-based reforms, specifically school-based accountability measures and teacher performance pay. Not all involved in education policy debates agree with the need for new directions and new incentives at schools, however. Thus, we also consider the impact of expanding school resources as a third option for fixing schools. In particular, we review the literature on reduced class sizes and quality teachers as two possible areas of resource investment. Our review shows that, while details associated with the policy instruments are likely to be highly significant, there are risks if these instruments are not finely crafted. Simple increases in school resources do not appear to make a difference in education outcomes, but the well-targeted investment of resources may be worthwhile. Further research is needed in this area, especially with regard to how we identify quality teachers. (Review of Research in Education, 2003 27: 1-24.)