In twist on merit pay, teachers work to avoid losing bonus

Teacher with two little boysWhat could be more motivating to a teacher than getting a bonus for student performance? Losing that bonus, according to recent research by Roland Fryer and colleagues.

In a recent study of 150 Chicago teachers, researchers found that students whose teachers received up-front bonuses rather than bonuses at the end of the school year made statistically significant gains in math —roughly .2 to .3 standard deviations. The results were the same whether teachers received the bonuses as individuals or teams.

Chicago teachers in this study receive $80 per percentile for a maximum possible reward of $8,000. The expected value of the reward ($4,000) is equivalent to approximately 8% of the average teacher salary, according to the researchers.

Participating teachers were randomly assigned to one of 4 treatment groups or a control group. Teachers in the 2 incentive groups received rewards based on their students’ performance on a low-stakes diagnostic assessment aligned with the Illinois standards high-stakes test. Teachers in the 2 “loss” treatment groups received part of their bonus at the beginning of the year and signed a contract pledging to return some of the money if their student’s performance was below average. Teachers were assigned to loss and gain groups that received bonuses as individuals or teams.

“The results of our experiment are consistent with over 30 years of psychological and economic research on the power of loss aversion to motivate individual behavior,” the researchers write.

Fryer and colleagues implemented the initiative in 2010-11 in 9 K-8 schools with high percentages of low-income, minority students.  No significant impact was found for students whose teachers received incentives in the traditional fashion. Interestingly, effects were more pronounced for students in K-2 than in grades 3-8.

“Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment,” by Roland Fryer et al.: National Bureau of Economic Research, July 2012.

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