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Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment

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  • Roland G. Fryer, Jr
  • Steven D. Levitt
  • John List
  • Sally Sadoff

Abstract

Domestic attempts to use financial incentives for teachers to increase student achievement have been ineffective. In this paper, we demonstrate that exploiting the power of loss aversion—teachers are paid in advance and asked to give back the money if their students do not improve sufficiently—increases math test scores between 0.201 (0.076) and 0.398 (0.129) standard deviations. This is equivalent to increasing teacher quality by more than one standard deviation. A second treatment arm, identical to the loss aversion treatment but implemented in the standard fashion, yields smaller and statistically insignificant results. This suggests it is loss aversion, rather than other features of the design or population sampled, that leads to the stark differences between our findings and past research.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18237.

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Date of creation: Jul 2012
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Handle: RePEc:nbr:nberwo:18237

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References

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  1. Daniel Aaronson & Lisa Barrow & William Sander, 2007. "Teachers and Student Achievement in the Chicago Public High Schools," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 95-135.
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Citations

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Cited by:
  1. Scott A. Imberman & Michael F. Lovenheim, 2012. "Incentive Strength and Teacher Productivity: Evidence from a Group-Based Teacher Incentive Pay System," NBER Working Papers 18439, National Bureau of Economic Research, Inc.
  2. Guarino, Cassandra & Reckase, Mark D. & Stacy, Brian & Wooldridge, Jeffrey M., 2014. "A Comparison of Growth Percentile and Value-Added Models of Teacher Performance," IZA Discussion Papers 7973, Institute for the Study of Labor (IZA).
  3. John A. List & Anya Savikhin Samek, 2014. "The Behavioralist as Nutritionist: Leveraging Behavioral Economics To Improve Child Food Choice and Consumption," NBER Working Papers 20132, National Bureau of Economic Research, Inc.
  4. Allcott, Hunt & Rogers, Todd, 2012. "How Long Do Treatment Effects Last? Persistence and Durability of a Descriptive Norms Intervention's Effect on Energy Conservation," Working Paper Series rwp12-045, Harvard University, John F. Kennedy School of Government.
  5. Rothstein, Jesse, 2012. "Teacher Quality Policy When Supply Matters," Institute for Research on Labor and Employment, Working Paper Series qt81q0f4bc, Institute of Industrial Relations, UC Berkeley.
  6. Thomas Dee & James Wyckoff, 2013. "Incentives, Selection, and Teacher Performance: Evidence from IMPACT," NBER Working Papers 19529, National Bureau of Economic Research, Inc.
  7. Keith M. Marzilli Ericson & Andreas Fuster, 2013. "The Endowment Effect," NBER Working Papers 19384, National Bureau of Economic Research, Inc.
  8. Nicholas C. Barberis, 2013. "Thirty Years of Prospect Theory in Economics: A Review and Assessment," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 173-96, Winter.
  9. Steven D. Levitt & John A. List & Susanne Neckermann & Sally Sadoff, 2012. "The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance," NBER Working Papers 18165, National Bureau of Economic Research, Inc.
  10. Nicholas C. Barberis, 2012. "Thirty Years of Prospect Theory in Economics: A Review and Assessment," NBER Working Papers 18621, National Bureau of Economic Research, Inc.
  11. Olivier Armantier & Amadou Boly, 2014. "On the effects of incentive framing on bribery: evidence from an experiment in Burkina Faso," Economics of Governance, Springer, vol. 15(1), pages 1-15, February.
  12. Jonathan de Quidt, 2014. "Your Loss Is My Gain: A Recruitment Experiment With Framed Incentives," STICERD - Economic Organisation and Public Policy Discussion Papers Series 52, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  13. Katharina Hilken & Stephanie Rosenkranz & Kris De Jaegher & Marc Jegers, 2013. "Reference Points, Performance and Ability: A Real Effort Experiment on Framed Incentive Schemes," Working Papers 13-15, Utrecht School of Economics.

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