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

Author

Listed:
  • 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.

Suggested Citation

  • Roland G. Fryer, Jr & Steven D. Levitt & John List & Sally Sadoff, 2012. "Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment," NBER Working Papers 18237, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18237
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    References listed on IDEAS

    as
    1. Steven G. Rivkin & Eric A. Hanushek & John F. Kain, 2005. "Teachers, Schools, and Academic Achievement," Econometrica, Econometric Society, vol. 73(2), pages 417-458, March.
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    5. Steven Glazerman & Allison McKie & Nancy Carey, 2009. "An Evaluation of the Teacher Advancement Program (TAP) in Chicago: Year One Impact Report," Mathematica Policy Research Reports 3b6a785529e04d5aa0e19a624, Mathematica Policy Research.
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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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