Working Paper: NBER ID: w18237
Authors: 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.
Keywords: teacher incentives; loss aversion; student achievement; field experiment
JEL Codes: J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| loss treatment (G33) | student math test scores (C12) |
| gain treatment (C78) | student achievement (I24) |
| incentive structure (M52) | teacher motivation (M54) |
| teacher motivation (M54) | student achievement (I24) |
| loss aversion (G41) | teacher performance (A29) |
| loss treatment (G33) | teacher quality (A21) |