Welcome to the Profit of Education website. Continuing the conversation begun in the book Profit of Education, we discuss the latest economic evidence on education reform.

More evidence on incentive pay

On Monday, I wrote about the end of NYC’s teacher bonus program. Yesterday, I wrote about the evidence that a teacher incentive plan in Texas seems to have done a little good, but only a little. Education Next is reporting on findings by Sarena Goodman and Lesley Turner (both PhD candidates in economics at Columbia) that shows that the just-ended NYC program had essentially no effect. (Perhaps this was linked to NYC booting the bonuses, as suggested by EdNext’s headline “New York City’s decision to scrap school-wide bonus pay echoes study findings that school-wide performance pay hampers the incentives for individual teachers to improve performance?”)

Briefly, just over 300 “high need” schools in NYC were randomly split into a group eligible to receive bonus money, and a control group where teachers weren’t eligible. Bonuses typically ranged from 3 to 7 percent of salary. As part of an innovative arrangement with the UFT  (NYC’s teachers union), the bonus came to the school based on school-wide performance and a committee then decided how to allocate the money. In about half the schools, the committee split the bonus money equally among all teachers.

Schools that were eligible for bonus money did no better than schools assigned to the control group. Goodman and Turner show this convincingly. They also find evidence suggesting that the program did somewhat better in schools with few teachers–schools where the “free rider” problem would be less. But even here, the effect of the bonus program was quite small.

One more piece of evidence against the idea that incentive pay is a cheap-out to escape the need for higher pay.

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