Pay-4-Performance: Individual vs. Group Incentives

Schools are identified as failures under No Child Left Behind. Turning around a school may include firing the staff or even closing the school. In short, the school is the unit for punishing failure.

And that is smart because when it comes to determining failure policymakers understand that schools are collectives of adults and children where structures and group cultures have an enormous influence on what individual teachers and students do. They also recognize that schools are interdependent units of teachers–the 4th grade teacher depends upon the kindergarten through third grade teachers to prepare her students for the work that her 10 year-olds will be doing. Similarly, high school physics teachers depend upon 9th grade math and science teachers to have thoroughly prepared their students for their courses.

If it is policy smart to see schools as units when failure and turnarounds are concerned, then why the passion and hullabaloo for paying individual teachers based on test scores rather than rewarding the entire school?

Much of the answer, of course, goes to the love affair that efficiency-driven policymakers have had with the success of business approaches since the late-1970s. Then, Japanese business approaches incorporating quality control, restructuring, just-in-time inventories, and other efficiencies were imported into U.S. industries. The spectacular business boom between the late 1980s- through the 1990s (except for the brief recession that threw President H.W. Bush out of office and elevated Arkansas governor Bill Clinton to the presidency) convinced many policymakers and political leaders that successful business approaches could (and should) be easily imported into school improvement. If schools had to compete like businesses do, innovation and efficiencies would surge and improvement would spread. Enter expanded parental choice and charters. If districts would move away from single salary schedules and embrace rewarding successful teachers and dumping unsuccessful ones–as businesses have to do every day with their employees–then students would profit from the best teachers and avoid the worst. Enter pay-4-performance plans. No Child Left Behind becomes law in 2002 providing test scores as the single most important basis for identifying failing schools. The technology for identifying those teachers within each school whose students did well and those who did poorly was already available.

The idea that individual teachers could be determined “effective” based on their students test scores a la the Tennessee value-added assessment studies, has produced a cascade of plans (also see Podgursky and Springer-TeacherPerformancePay) to evaluate teachers, identify “effective” ones, and then pay those a premium based on their performance. These schemes have gained a great deal of traction since the recession of 2008, the joint Bush/Obama education agendas, and recent efforts to cut education spending.

In education, however, political and policy consensus often ignores research findings that challenge that consensus. There has been a growing consistency of findings, for example, on the failures of teacher merit pay since the 1920s or offering individual incentives. See here (fulltext-8) and here. There is also an emerging literature that piece rate payments (individual incentives) in manufacturing is less effective than group incentives (see PDF–w16540). Even more striking is the evidence from developing countries like Kenya (w9671) and India (w15323) where the kinds of research–experimental/ control studies with rigorous randomized assignment of schools and teachers that policymakers advertise as the gold standard and called for in NCLB–found that group incentives at the school paid off far more than individual ones given to teachers.

Of course, such evidence drawn from from historical studies of merit pay and research done in other countries–even when carried out by economists who policymakers prize–have little influence on decision-makers and their allied donors precisely because they cut holes in the current consensus of paying individual “effective” teachers more than those identified as less “effective.”

Research studies past and present, in education and in business, challenge this group-think among corporate leaders, the past three U.S. Presidents, and state governors. Seldom, however, do these studies ever show up in public debates. Their absence from policy talk and action testifies to the weakness of research findings–even when contributed by economists–on educational decisions except on those occasions when the decision already has been made and then studies are trotted out to justify the decision.

If research findings that undermine the current “wisdom” are shrugged off, what about policy consistency? Today, those schools identified as failing are punished by firing staff, being restructured, converted into charter schools or shut down. There is a practical wisdom to recognizing that teachers and student work interdependently within school structures and cultures to produce failure. Yet if the unit is the school for determining failure and then punishment, it seems minimally consistent that the school, not individual teachers or principals, should also be the unit for rewards–beyond a plaque or flag.