Pay for Percentile
We analyze an incentive pay scheme for educators that links educator compensation to the ranks of their students within appropriately defined comparison sets, and we show that under certain conditions this scheme induces teachers to allocate socially optimal levels of effort to all students. Moreover, because this scheme employs only ordinal information, it allows education authorities to employ completely new assessments at each testing date without ever having to equate various assessment forms. This approach removes incentives for teachers to teach to a particular assessment form and eliminates opportunities to influence reward pay by corrupting the equating process or the scales used to report assessment results. Education authorities can use the incentive scheme we describe while employing a separate no-stakes assessment system to track secular trends in scaled measures of student achievement.
|Date of creation:||Jul 2011|
|Date of revision:|
|Publication status:||published as Gadi Barlevy & Derek Neal, 2012. "Pay for Percentile," American Economic Review, American Economic Association, vol. 102(5), pages 1805-31, August.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jerry R. Green & Nancy L. Stokey, 1982.
"A Comparison of Tournaments and Contracts,"
NBER Working Papers
0840, National Bureau of Economic Research, Inc.
- Edward P. Lazear & Sherwin Rosen, 1979.
"Rank-Order Tournaments as Optimum Labor Contracts,"
NBER Working Papers
0401, National Bureau of Economic Research, Inc.
- Victor Lavy, 2002. "Evaluating the Effect of Teachers' Group Performance Incentives on Pupil Achievement," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1286-1317, December.
- O'Keeffe, Mary & Viscusi, W Kip & Zeckhauser, Richard J, 1984. "Economic Contests: Comparative Reward Schemes," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 27-56, January.
- Scott E. Carrell & James E. West, 2008.
"Does Professor Quality Matter? Evidence from Random Assignment of Students to Professors,"
NBER Working Papers
14081, National Bureau of Economic Research, Inc.
- Scott E. Carrell & James E. West, 2010. "Does Professor Quality Matter? Evidence from Random Assignment of Students to Professors," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 409-432, 06.
- Ladd, Helen F., 1999.
"The Dallas school accountability and incentive program: an evaluation of its impacts on student outcomes,"
Economics of Education Review,
Elsevier, vol. 18(1), pages 1-16, February.
- Ladd, Helen F., 1996. "The Dallas School Accountability and Incentive Program: An Evaluation of Its Impacts on Student Outcomes," Working Papers 96-18, Duke University, Department of Economics.
- H. Vogt, 1983. "Unimodality of differences," Metrika, Springer, vol. 30(1), pages 165-170, December.
- Atkinson, Adele & Burgess, Simon & Croxson, Bronwyn & Gregg, Paul & Propper, Carol & Slater, Helen & Wilson, Deborah, 2009.
"Evaluating the impact of performance-related pay for teachers in England,"
Elsevier, vol. 16(3), pages 251-261, June.
- Adele Atkinson & Simon Burgess & Bronwyn Croxson & Paul Gregg, 2004. "Evaluating the Impact of Performance-related Pay for Teachers in England," The Centre for Market and Public Organisation 04/113, Department of Economics, University of Bristol, UK.
- John Cawley & James Heckman & Edward Vytlacil, 1999. "On Policies To Reward The Value Added By Educators," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 720-727, November.
- Malcomson, James M, 1984. "Work Incentives, Hierarchy, and Internal Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 486-507, June.
- Christine Harbring & Gabriele K. Lünser, 2008. "On the Competition of Asymmetric Agents," German Economic Review, Verein für Socialpolitik, vol. 9, pages 373-395, 08.
- Dale Ballou, 2009. "Test Scaling and Value-Added Measurement," Education Finance and Policy, MIT Press, vol. 4(4), pages 351-383, October.
- Edward P. Lazear, 2001. "Educational Production," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 777-803.
- Michael Kremer & Nauman Ilias & Paul Glewwe, 2003.
Natural Field Experiments
00257, The Field Experiments Website.
- Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
- Derek Neal, 2010. "Aiming for Efficiency Rather Than Proficiency," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 119-32, Summer.
- Bhattacharya, Sudipto & Guasch, J Luis, 1988. "Heterogeneity, Tournaments, and Hierarchies," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 867-81, August.
- Victor Lavy, 2004.
"Performance Pay and Teachers' Effort, Productivity and Grading Ethics,"
NBER Working Papers
10622, National Bureau of Economic Research, Inc.
- Victor Lavy, 2009. "Performance Pay and Teachers' Effort, Productivity, and Grading Ethics," American Economic Review, American Economic Association, vol. 99(5), pages 1979-2011, December.
- Daniel M. Koretz, 2002. "Limitations in the Use of Achievement Tests as Measures of Educators' Productivity," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 752-777.
- Jacob, Brian A., 2005. "Accountability, incentives and behavior: the impact of high-stakes testing in the Chicago Public Schools," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 761-796, June.
- Flavio Cunha & James J. Heckman, 2008. "Formulating, Identifying and Estimating the Technology of Cognitive and Noncognitive Skill Formation," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
- Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
- Carmichael, H Lorne, 1983. "The Agent-Agents Problem: Payment by Relative Output," Journal of Labor Economics, University of Chicago Press, vol. 1(1), pages 50-65, January.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:17194. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.