Illumination | Spring 2008

The problem, he explains, is that school districts are spending more and more per student with little to show for it.

"It isn't a question of cheapness. We are pouring resources into this sector, and still test scores have been fairly stagnant. The black-to-white achievement gap hasn't narrowed in a decade. So it's not just a question of throwing more money in. You've got to move resources to where they're having the biggest bang. You've got to take money from this thing that's not working and put it over here into this thing that is working, and 'this thing' could be a curriculum, it could be equipment, or it could be people. But it's the same old argument about cost efficiency."

School districts are getting more serious about maximizing resources in response to both national legislation, such as No Child Left Behind, and state legislation such as the Missouri School Improvement Act, that require schools to improve student achievement or face consequences.

"There's nothing in No Child Left Behind per se about teacher incentives, but there is about performance," Podgursky says. "So the point here is how do you get the performance? There are a variety of tools -- alternative teacher certification, charter schools, curriculum changes -- but this [performance-based pay] is one that really hasn't been used, and again, as an economist, we think incentives are important, so we think this is an area where there should be more attention, effort and experimentation. Because we think incentives matter."

It's more than a hunch. In a 2007 study published by the Journal of Policy Analysis and Management, Podgursky and Springer critique previously published studies on salary incentives. Their review includes only those studies with a rigorous study design, the authors say. Of the nine considered, seven studies associate incentives with positive student achievement effects. In every study, moreover, incentives raised the level of the variable tied to the incentive.

"The overall findings ... stand in rather sharp contrast to the mixed but generally negative findings of production function studies of the effect of teacher characteristics such as teacher certification, education, or class size," wrote Podgursky and Springer.

The studies examined the "motivation effect" of incentives, or how well incentives motivate teachers to perform better. In addition, Podgursky and Springer argue that incentives offer another key benefit: They tend to attract and retain people who are good at the activity for which there is an incentive.

Think of it this way, Podgursky says. If you tie an incentive to a specific outcome, say, test score gains, then you will not only motivate teachers already on the payroll to find ways to boost scores, but will also tend to attract and retain teachers who are skilled at raising student scores. In addition, such a system may encourage those who are not capable of raising scores to look for work elsewhere.

Published by the Office of Research.