Study Shows Advance Merit Pay Increases Student Achievement

Economics researchers have conducted a study of 150 Chicago Heights teachers that seems to show that merit pay works much better if the payments are made in advance and then taken away for failure than if they are given as a reward. This is the first US field experiment to conclude that merit pay for teachers can work, and also marks an exciting multi-discipline collaboration which shows the potential for cross-pollination of ideas within different academic spheres. The theory of loss aversion and its possible practical application to the issue of merit pay in education would be obvious to psychologists and economists, but this is the first time it has been tried in an education context.

“It’s a deeply ingrained behavioral trait. .. that all human beings have — this underlying phenomenon that ‘I really, really dislike losses, and I will do all I can to avoid losing something,’ ‘’ said one author, John List, chairman of the University of Chicago’s department of economics.

Publication of the research project by the eminent economists from Harvard and the University of Chicago is garnering some local controversy, however, because some teachers were under the impression that the data would be completely confidential. The Illinois Federation of Teachers maintains that Superintendent Tom Amadio told them that the district would be unidentifiable and that without this guarantee they wouldn’t have agreed to take part.

“They agreed to let [researchers] collect some data,’’ said IFT spokesman Dave Comerford. “Part of the reason they agreed is that the district and union wouldn’t be identified. . . . They didn’t want to be perceived as supporters of merit pay.’’

Union leaders and members are “unhappy” and feel “somewhat misled,’’ Comerford said.

As merit pay is something teaching unions have consistently campaigned against, the result of a study conducted with their help sends further compounds the situation. Chicago Heights teachers were given $4,000 upfront at the start of the school year with the knowledge that bad results would mean they would have to repay the sum, but that excellent results would allow them to double it. This incentive scheme produced around three times the gain in student math scores as when teachers were offered $8,000 end of year bonuses. While the sample size involved means that one cannot draw a positive conclusion that loss aversion and merit pay are a guaranteed winning combination, the strong positive results certainly merit further study.

But further study is likely to be complicated by union resistance. Karen Lewis, president of the Chicago Teachers Union, was offended by the notion that money would motivate teachers to perform better.

“Merit pay assumes we are not working hard enough and we have hidden something from the children,’’ said Lewis, who also serves as vice president of the Chicago Heights’ parent union, the IFT.