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The Reversible Bonus: A Mean But Effective Way to Boost Teacher's Performance?

Can we boost a teacher's academic performance by giving him or her more money? Efforts to reward teacher's performance with year-end bonuses have largely failed, but a new study by economists revealed that you can indeed motivate teachers to perform better: you just have to give them money up front, and threaten to take it away if they fail.

Thanks to education reformers such as former D.C. schools chancellor Michelle Rhee, many of us are now familiar with the idea of merit pay -- the notion that teachers' earnings should be tied to their students' success. Unions have pushed back hard against the idea. In terms of public policy, it often translates into handing out year-end bonuses to instructors who get the best results, with the hope that the promise of a larger paycheck will motivate them to work harder when they're up in front of the chalkboard.

But Levitt, Fryer and Co. argue that there's a serious problem with merit pay. So far, they say, there's been scant evidence that it actually works. Studies of teacher incentive programs in Tennessee and New York City failed to find any signs that they improved student learning. In the New York experiment, which Harvard's Fryer conducted, the impact may have even been detrimental.

Enter loss aversion. The authors theorized that instead of offering a lump-sum bonus to teachers come summertime, it might be more effective to give instructors money upfront, then warn them that they would have to pay it back if their students didn't hit the proper benchmarks. Rather than tap into teachers' ambition, they'd tap into their anxiety.

Jordan Weissmann of The Atlantic explains: Link 

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There are many problems with this.

Unless you are teaching first grade only, much of what you will teach your children depends on prior knowledge - you're ability to educate the children will be largely based on how well they were educated before reaching you.

Some years, just by odds, you are going to have a poorly performing batch of children. These and other factors introduce a lot of randomness to the process. In this case, dire financial consequences could result.

This could have negative incentive consequences. A teacher responsible for more than 30 children has a finite amount of time. The lower performing child who must raise his scores 30 points just to pass and the high performing child who could afford to lose 30 points will be equally ignored in favor of borderline children to get better stats.

They will 'teach to the test' even more, ignoring application and intuitive understanding.

I suspect this will do little to eliminate terrible teachers with the side effect of sometimes punishing good ones.
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Another deeper question I have, and one that is not talked about in the article, except in the comments, is did they look for cheating? Michelle Rhee, a darling of the charter school system looked great until evidence of institutional cheating surfaced which were inflating grades.

How do we really know that we are not instead promoting people who are willing to cheat, rather than those who actually teach better?
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