Study Shows Student Performance Improves When Teachers Given Upfront Incentives

A bonus payment to teachers can improve student academic performance — but only when it is given upfront, on the condition that part of the money must be returned if student performance fails to improve, research at the University of Chicago shows.

The study showed that students gained as much as a 10 percentile increase in their scores compared to students with similar backgrounds — if their teacher received a bonus at the beginning of the year, with conditions attached. There was no gain for students when teachers were offered the bonus at the end of the school year, the research found.

“This is the first experimental study to demonstrate that teacher merit pay can have a significant impact on student performance in the U.S.,” said UChicago economist John List, an author of the study.

The study, “Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment,” published by the National Bureau of Economics Research, reflects the findings of other studies in psychology and behavioral economics.

“The results of our experiment are consistent with over 30 years of psychological and economic research on the power of loss aversion to motivate behavior: Students whose teachers in the ‘loss’ treatment of the experiment showed large and significant gains in their math test scores,” said List, the Homer J. Livingston Professor in Economics at UChicago.

“In line with previous studies in the United States, we did not find an impact of teacher incentives that are framed as gains (the reward coming at the end of the year),” he added.

The other authors of the study were Roland Fryer Jr., the Robert M. Beren Professor of Economics at Harvard University; Steven Levitt, the Homer J. Livingston Professor in Economics at the University of Chicago; and Sally Sadoff, assistant professor at the Rady School of Management at the University of California, San Diego.

The study comes amid a growing wave of interest of finding ways to provide teacher incentives to increase student performance. Those incentives are frequently tied to student performance on high-stakes standardized tests. None of the programs have been shown to work, however, the scholars said.

The new study depends on a formula developed by Derek Neal, professor of economics at UChicago, and Gadi Barlevy, an economist with the Federal Reserve Bank of Chicago. They devised the “pay for percentile” method of measuring teacher performance by comparing individual students with similar backgrounds and achievement to see what impact a teacher had on their learning.

The scholars used the formula in an experiment in Chicago Heights, Ill., a community 30 miles south of Chicago. The community has nine kindergarten to eighth-grade schools with a total enrollment of 3,200 students. Its achievement rates are below state average, and 98 percent of the students are eligible for free or reduced lunches.

At the beginning of the school year, the teachers were introduced to the experiment and offered an opportunity to participate. A total of 150 of the 160 teachers agreed to join in the study, which was supported by the local teachers union.

The teachers were randomly assigned to a control group as well as a group given a bonus at the beginning of the year, a group that could receive the bonus at the end of the year, and a group made up of teachers who worked in teams. Money for the bonuses was provided from private sources.

One group of teachers in the study was given a $4,000 bonus at the beginning of the year and told it would be reduced by an amount reflecting their students’ performance — the more the students’ standardized scores increased, the more of the bonus their teacher could keep. Another group of teachers was told they would receive a $4,000 bonus if their students improved during the year.

The incentives were based on rewarding teachers with $80 for each percentile of increase in their students’ mathematics performance over the district average. They could, depending on exceptional student performance, receive up to $8,000 under the plan — the equivalent of 16 percent of the average teacher salary in the district.

The students were tested with the ThinkLink Predictive Assessment, a standardized, non-high-stakes diagnostic tool that is aligned with state achievement tests.

Thomas Amadio, superintendent of Chicago Heights Elementary School District 170, where the experiment was conducted, said the study shows the value of merit pay as an encouragement for better teacher performance.

“Teachers do have challenges, and classes can vary from year to year in how well they perform. Testing students individually to see their growth is a valuable measure, however,” he said. Teachers responsible for that growth should be rewarded, he said.


  1. Another View says:

    “Testing students individually to see their growth is a valuable measure, however, . . . Teachers responsible for that growth should be rewarded . . . .”

    Aren’t teachers already paid for students to be educated and to progress? Isn’t that their job?

  2. Chuck E. Cheese says:

    It’s called an incentive program! Read closely!

    • Another View says:

      I read it very closely. I see no read to provide additional incentives for teaching students. Teachers are already being paid, and students are not learning. It makes no sense to pay teachers more in the hopes that they will do that for which they are already being paid.

      • Another View says:

        ERRATA: I see no [need] to provide additional incentives for teaching students.

  3. Uncle Jessie says:

    Another View-
    Please go away. You have ruined this site.

    • Another View says:

      “[I] have ruined this site.”

      Why? Because it is not an echo chamber?

      Why? Because you are not comfortable having your worldview challenged?

      Why? Because my views are different from yours, and you are incapable of substantive debate?

      Why? Because you wish to suppress speech with which you disagree?

      Why? Why should I “go away”? Would it not make more sense that if your sensibilities are so tender and fragile that you should go away?

      Indeed, why shouldn’t you go away? Your contribution to this site is to cast aspersions and call names against those with whom you disagree. Do you have nothing substantive to contribute?

    • How has the site been “ruined”?

  4. why don’t you explain why you feel that employees don’t deserve incentives, av?
    do you think that incentives don’t produce results?
    give a sales team a cash incentive to push a certain product and you’ll see a marked improvement. what’s the problem with applying that method to teachers?
    what, teachers are supposed to be martyrs for their trade and refuse bonuses?
    av you’ve got a touch of conservative greed-itis, that’s my call..

    • “…av you’ve got a touch of conservative greed-itis…”

      Why the need for the “conservative” adjective? Isn’t greed just greed? By using that adjective, you are saying there is also such a thing as “liberal greed-itis”. Is that what you wanted to convey?

      • nope, i know av’s signature. he’s proud of it. i was talking to av, specifically not all people, generally.
        of course there is greed in all of us, whoever says otherwise is lying.

        • Another View says:

          No you do not. How dare you call me “greedy”. You don’t know me, you don’t know my signature.

          The “greedy” are those who demand others’ resources. In this case, that would be teachers who are not teaching as it is. Now they want to get paid more to finally do it right? By getting more taxpayer dollars, which are taken by force?

          No, no, a thousand times no. The real greed is in the public sector, and those who depend upon the public sector’s largesse.

          • your signature, as in your persona in this forum.

            and i did say you were letting your greed get the best of you. because that’s what your words tell me. i read them here every day. i’m not a teacher, but my son is in public school. i think incentives bring mutually beneficial results and don’t see the harm. you immediately quip that teachers don’t teach, students don’t learn and neither are worthy of the benefit that could result from such a program. the real greed is in the public sector?… where the heck did your kids go to school?

          • Another View says:

            Private school. Because the public schools do not deliver a quality education.

            WHY IN THE WORLD would anyone choose to permit the GOVERNMENT to educate [indoctrinate] their child?

            I have no greed. I earn what I have and take from no one. The public sector, on the other hand, exists solely as a parasite on the private sector. It produces nothing, and relies on forced taxation for its funding. And somehow that funding is never enough. No matter the problem, it is always lack of funding. THAT Valerie, is greed.

          • sustaining infrastructure is not greed.
            and the private sector would crumble without the private. we can’t all be rich av…

          • Another View says:

            Sustaining infrastructure is one thing. Rewarding incompetence and bloated bureaucrats is quite another.

            Public schools receive far more money than private schools, yet turn out an inferior product. Every year–all year–the constant refrain is “more money”.

            If more money were the answer, every public school graduate would be a Nobel Laureate.

            The fact is, the populace was, by and large, better educated BEFORE widespread institution of public education. And while there was a period when public education did a fair job at its task, that period is long past.

            Students who cannot properly write and speak English, who have barely a rudimentary understanding of geography and history, who know little if any of a foreign language, and who require a calculator to do basic calculations is unacceptable. These students have high self esteem, but about what? Mediocrity?

            We need to challenge students. If the teachers cannot do this on their current salaries, then on what basis do they deserve a bonus? The short answer is that they don’t.

          • “The fact is, the populace was, by and large, better educated BEFORE widespread institution of public education.”

            What a laughably fact-less bit of revisionist history you spewed right there. You seem to long for the days when only certain folks could get an education – whether it be by gender and/or race (as in propertied white boys), or some other qualification. It wasn’t until ppublic schools were organized by the states, and further standardized by the federal government, that women, minorities, and students with disabilities truly received (theoretically) an equal footing to white males.

            I agree with you (shocker!) that there are woefully un-performing and under-performing schools. However, despite your rants, it does indeed come down to funding.

            This study is built upon a set of incentives funded “from private sources.” Ultimately, it is the expectation that school divisions will pony these “incentives” up themselves. As we’ve seen all too frequently, when cuts have to be made, folks of your ilk (or slightly more moderate) look to cut the “bloated” public school bureacracy (which is demonized almost as much as the VDoT hierarchy). So, when funding for resources and staffing is eliminated, and class sizes go up, achievement on this scale is harder to come by. And the square dance begins anew.

            As to your earlier query as to whether or not the teachers are already paid a salary, you already know that answer, so don’t be obtuse. Do you not earn a bonus if you successfully defend or pursue a particularly tough legal case? Do not production line workers not also get paid a salary or wage yet get a bonus if certain efficiency benchmarks are met? Sure. Happens all the time.

            What you glibly toss aside, what a LOT of folks glibly toss aside, is that education is unlike any other profession. Teachers do not set their own hourly rates, as you do as a lawyer. Public schools cannot exclude any student except for certain specific special cases that are beyond the school’s capacity to educate adequately (and even then, the school division sometimes still has to pay to place a kid in someplace like Timber Ridge). Private schools get to select who gets in, and thus the student body is not totally comparable to a typical public school. The 2nd grade class at white-bread Powhatan is decidedly different than one at either Cooley or Boyce. (smaller class size, generally more affluent familieswho pay more than double what the per-child funding level is for a student in CCPS, etc.).

            So, save your uber-libertarian bombast for someone who is more easily duped by it.

          • Another View says:

            Throwing money at the public schools has made them worse, not better. More money, less product. It is the typical government story, applicable to almost all government functions.

            The populace was better educated before government got into schooling. Folks could read Greek and Latin, they spoke French, knew geography and history, read the Bible, and were well versed in current events. Public schooling was better BEFORE the federal government’s involvement. That that is so is easily demonstrated by statistics.

            Class size has no or little effect on education. The real problem is the dumbing down of the curriculum and the increase of the so-called “Education Major” in college. In fact, “Education Majors” are easily the least competent and ill informed students in a college. It is geared to meeting government approved standards, and has nothing to do with education. Meanwhile, those same government standards prevent folks with knowledge, ability and desire from teaching in public schools. There is your square dance.

            And if you think that Powhatan is a “white bread” school–nice cheap shot by the way–you are ignorant. Clearly you know nothing of that school.

            Bottom line, there is too much money in public schooling. I personally would never permit the government to teach my children. But if others choose it, so be it. But the problem has nothing to do with money. It has to do with the very nature of government itself; again, why I would never permit the government to teach my children.

          • AV, there is no such thing as an “Education” major in Virginia anymore – at least, not with a Bachelor’s degree. To eearn a teaching license in Virginia, you must have a BA or BS degree in a subject area (other than “education”) such as Math, History, English, etc., and then get teaching credentials. Even a Master in Education is more than just “an education degree;” there’s a specific area of focus (administration, reading specialist, school library media, school counseling, etc.).

            “The State of Virginia suggests that students major in an Arts & Sciences discpline in order to be certified to teach. For Elementary Education students, this means that the student may choose any Arts & Sciences discipline (English, Biology, French, Psychology, Math, etc.) as the primary major, and then add education as a second major in order to obtain certification to teach. A Secondary Education student must major in the subject he or she wishes to teach. Students cannot have a primary major in education in the state of Virginia.”

            Also, your claim that government standards prevent those with “knowledge, ability and desire from teaching in public schools” is patently false. Many Virginia colleges have “Career switcher” programs that enable private-sector professionals who want to teach to be able to get the teacher prep credentials necessary to do so, often while getting a lot of credit for their prior work experience. You see this a lot with retired military officers and others, especially in the STEM subjects.

            Finally, class size most definitely DOES have an impact on student achievement. This research review is but one example:
            Now, it does say that smaller class sizes achieve the most benefit at the elementary grade levels, but the proof is there, nonetheless.

          • What is a private school teacher? In my experience with them, and I have had a lot of experience with them, they are people who could not be public school teachers, or just couldn’t cut the mustard as one. Private school teachers actually prevented my children from excelling. Once I put them back into the public school system in Clarke, they flourished. Yep, there are a few crummy teachers in the system, but we were lucky to steer clear of them.

          • lovethisplace says:

            Private school teachers don’t always need college degrees as well. They can have failed teaching public school, or, they can have decided that all the standardized testing that hinders creativity is simply not worth the hassle.

          • I should mention though, that I had one private school teacher that had such a huge influence on me and was so good at challenging me, I am still in contact with her 30 years after the fact. Without a doubt, the best teacher I’ve ever had in my life.

  5. Another View says:

    It is not “greed-itis” to be parsimonious with the public treasury, or to wish to keep more of one’s own earned monies. It is, however, greedy, to demand that others be forced to pay you more.

    I thought I had explained my reasoning. Teachers are already being paid to teach. Students are not learning. It makes no sense to reward teachers who teach students to learn, as they are already being paid for that. A bonus should be for going beyond the call of duty, not for one doing their duty.

    And in the private sector, sales teams get incentives for additional production–beyond what they are otherwise expected to do, and for which they are paid. That is not the case in this study.

    • Rice St. Resident says:

      How about this? They are being paid to educate and maintain the current student performance. Keep in mind the current performance isn’t based on just the current teachers abilities, but rather a culmination of teacher abilities for all the years prior as well. To to use your reasoning, they are being paid to teach and maintain current performance. However, if a teacher excels, and improves overall test scores for the students (s)he has taught over the year, hasnt (s)he exceeded what was expected, and therefore the bonus is warrented? Just as a teacher whos student declined did not meet expectations.
      Just another view for Another View…

      • Another View says:

        No. Right now the public schools are maintaining a poor student performance level. Given the product being produced–student performance, competence and education–the teachers are being overpaid.

        • EagleFan says:

          That is such a huge sweeping generalization. Just because performance is at a lower level (based solely on test results) does not mean that 100% of teachers are not performing their job duties. I hope you are not judged like this in your profession. I am thankful that I’m not.

          • Another View says:

            That is “such a huge sweeping” truth. Performance is down, kids who go to college are taking remedial classes at an all time high, and that should not be rewarded.

            I am judged by my results. And rewarded accordingly. If I performed at the typical public school teacher level, I’d be out of business.

          • So 100% of teachers are not performing? Really? I find that extremely hard to believe. I am a CCHS alumni and myself, along with many of my friends, had no issues entering into and successfully completing college.

            And I have no issues being judged on MY results and performance. It’s being judged on the results and performance of hundreds of others that seems a little unfair.

    • Teachers are being paid to teach. But possibly part of the reason the kids are not learning is because (gasp) they don’t want to. The teachers can’t make them. The parents say they are too tired to try, and why should they? isn’t that what the teachers are for? If the parents aren’t backing the teachers up then the teachers only have so much time to teach that they usually end up just teaching the kids who are there to actually learn.

      • Yes, students can decide to “not do well” Some really don’t care. Let’s blame the teachers! Some don’t want to take tests. Let’s blame the teachers! Some won’t do homework, and guess whom we blame?

      • Mike Sipe says:

        Great comment and the truth.

    • Mike Sipe says:

      The reason why kids aren’t learning is becuase quality parenting is not done in our society anymore. And, more was taught in public schools when disciplined was allowed and every parent didn’t challenge teachers/administartors decisions.

      • ElinorDashwood says:

        You have hit the nail on the head, Mike. Let me first say that there are still a lot of really good kids out there. The following paragraph isn’t speaking of them OR their parents.
        Some parents’ expectations have changed for their children and for teachers. These parents no longer expect their children to respect their teachers, therefore these students generally ignore them, and at times are blatantly belligerent. These parents bad mouth teachers at home because they think it is the teachers fault their child isn’t making good grades, which just adds to a student’s defiance in the classroom. They expect teachers to pour information into their child but have no idea how much time is spent trying to keep the disruptive students in check. If you put three of these students in a class of twenty, even the good students’ chances at learning is greatly minimized. I remember on my report card in elementary, there was a grade for conduct with a space to comment. If there still is such a thing that is the time to start telling parents about the issues…and without sugar coating them.

      • Jeremy Carter says:

        Boy…coach Sipe came in and said it.

        Firstly….how is none of this the child’s fault? Blame the teachers? Really? The child or ‘young adult’ has some responsibility in all of this. If the young adult can’t comprehend that they need to learn something to get somewhere in life…….what else can be done if this isn’t mashed into their head at home?

        I remember discipline in school. I’m not ‘that’ old…but we had some real consequences. Heck, I remember getting the paddle in elementary school by the principal one time. I deserved it!

        I didn’t seem to have any issue getting into college….doing the work….graduating…and becoming successful. Hell, I know quite a few of my classmates who did the same thing. Guess where we went??? Clarke County Public School. (not saying anything is wrong with private here…just making the reference)

        Oh…come to think of it though..I have the darndest time finding Texas on a map though. Sheesh….

        Frankly, teachers aren’t paid near enough to begin with anyway. That’s another fight for another day though. An incentive, as someone else said, helps all parties involved. And AV…I’d challenge you to take a pay cut…..make 30-34k as a teacher…and listen to the incessant parental involvement on how you suck and shouldn’t do this or that to their child. Have fun with it………..

  6. With the time you spend on CDN, your business is probably heading down that path right now! Unless it is your business! Cough, Cough!

  7. Another View says:

    Will wrote: “AV, there is no such thing as an “Education” major in Virginia anymore – at least, not with a Bachelor’s degree.”

    Norfolk State, William & Mary, Radford, Virginia Commonwealth and Old Dominion ALL OFFER undergraduate Education majors.

    I guess you were mistaken on that point. And I was right.

    • Another View says:

      And did I mention that THE UNIVERSITY OF VIRGINIA has a separate SCHOOL OF EDUCATION that offers undergraduate degrees? Forgive my omission.

      • From the UVA site:
        Undergraduate Programs – “Curry collaborates with the College of Arts and Sciences at U.Va. to make certain you’re an expert in your subject area, not just how to teach it.”
        “The Curry School of Education’s teacher education programs lead to a master’s degree and licensure/endorsement. Students earn a B.A. or B.S. degree from the College and an M.T. from the Curry of Education; degrees are awarded simultaneously at the end of the program.”

        But, again, don’t let the facts confuse you or prevent you from dissing public school teachers. You’re as bad as Karl Rove.

    • Incorrect, AV. According to the schools’ own websites:

      Norfolk State: Undergrads looking to go into certification into Elementary Education need to earn a degree in English, MAthematics, Psychology, INterdisciplinary Studies, or some other degree field, then complete coursework for a teaching license. They may be called “Education majors,” but that is not the same thing as “majoring in education” as you snidely dismissed. Same for secondary teachers.

      William & Mary: You completely ignored this school’s link I posted above.

      Radford: The undergrad degree for an elementary teacher is in “Interdisciplinary Studies,” since elementary teachers teach the 4 main core subjects. Secondary Education Programs prepare students to teach core academic subjects in grades 6-12. “Candidates in these programs complete a major in Biology, Chemistry, Earth and Space Science, English, Mathematics, Physics or Social Studies.”

      Virginia Commonwealth: The only undergrad “education major” is the BS in Health, Physical Education, and Exercise Science – which requires 120 credit hrs. of study in science coursework and other disciplines. ALL other education majors are required to eaern a degree in a specific field (interdisciplinary studies for elementary folks, core subject are for secondary folks).

      Old Dominion: No undergrad programs for “education majors,” except for things like speech therapy. ALL graduate level education classes in the Darden School of Education there require a bachelor’s degree in a content area or suject they wish to teach.

      From the Virginia DoE website: There are several routes to teacher licensure, but they all require a bachelor’s degree in a content area through a VDoE-accredited channel or college program.

      What you have shown is a clear misunderstanding of what it means to be an education major, or the coursework necessary to receive such credentials. But, that of course doesn’t matter to you, because you would rather dismiss an entire class of professionals with an elitist wave of your smug paw instead of fact-checking.

      • Another View says:

        WRONG. I am correct. You stated that Virginia schools did not offer undergraduate education majors. They do. And UVA has a whole School of Education, offering, inter alia, undergraduate education majors. Education majors are useless.

        You are misrepresenting the truth. Indeed, you are the type of person who claims that tax cuts are spending. It is pointless to debate you, so I won’t. Good bye.

      • ElinorDashwood says:

        Will, you will never get AV to admit that he is wrong on any subject, as he is a self proclaimed expert on all. Your knowledge on this subject is obviously extensive and I’m happy that AV knows to debate you is pointless, his admitting such and his farewell is the closest thing to a concession I’ve ever seen by him. Congratulations.

  8. Roscoe Evans says:

    So, here’s a test:

    Mark the following: Tor F

    1) Public schools are unconstitutional.

    2) Teaching in public schools is unconstitutional.

    3) Taxes to pay public school teachers are unconstitutional.

    4) Teaching the constitution in public schools is unconstitutional.

    5) Education is dumb, communistic, fascistic, socialistic, and unconstitutional. (This is a weighted question, for 5 extra points.)

  9. Roscoe Evans says:

    More seriously.

    This is a very well-written, comprehensive story, CDN. Thanks for it.

    If there is any criticism of the methodology or the validity of the study, or the expertise of the senior economists and the various social scientists who conducted it, that would be interesting. But as the culmination of 30 years of similar results, it seems compelling.

    I have a slew of teachers and coaches in my extended family, along with lawyers, a couple of doctors, and a bunch of regular working stiffs.

    The teachers are by far the hardest workers, and the worst compensated. None of them, not one, can raise his/her family on a teacher’s salary alone.

    And our kids, all of them, know that we as a society do not value teachers, teaching or education. It affects their performance, and its shown in the way parents and the public deal with teachers; and it’s a shame.