University of Florida Study: Teacher Merit Pay Boosts Student Standardized Test Scores

A carrot for teachers helps students stick to the books, according to a new University of Florida study that finds merit pay for instructors equates to better test scores for their pupils.
Pay incentives for teachers had more positive effects on student test scores than such school improvement methods as smaller class sizes or stricter requirements for classroom attendance, said David Figlio, a UF economics professor. The study, by Figlio and UF economics professor Lawrence Kenny, has been accepted for publication in a forthcoming issue of the Journal of Public Economics.
"This research provides the first systematic evidence of a relationship between individual teacher performance incentives and student achievement in the United States," Figlio said. "We demonstrate that students learn more when teachers are given financial incentives to do a better job."
Students at schools with teacher pay-for-performance programs scored an average of one to two percentage points higher on standardized tests than their peers at schools where no bonuses were offered, Figlio said.
"While many explanations have been offered for the disappointing performance of primary and secondary schools, one untested hypothesis lays the blame on there being little or no incentive for teachers to do a good job," he said. "Good teachers make no more than uninspired, mediocre teachers."
The UF study found the effects of these pay incentives were strongest in schools with students from the poorest families, perhaps because those schools have the most to gain from the incentive plan, Figlio said.
"Many teachers complain that poor parents often are uninvolved in their children's education," he said. "Since there appears to be less parental monitoring in schools serving poorer families, these schools stand to have a greater potential for improvement."
Figlio and Kenny collected surveys from 534 schools that were among 1,319 public and private schools participating in a national study sponsored by the U.S. Department of Education beginning in 1988. They also collected data on the frequency and magnitude of school salary incentives, analyzing it in relation to student achievement. That achievement was measured in the earlier U.S. Department of Education study on eighth-graders, with follow-up surveys done in 10th and 12th grades.
About 16 percent of American schools have teacher pay-for-performance programs in place, Figlio said. Such financial incentives were the rule rather than the exception early in the 20th century, but they gradually became less prevalent starting in the 1960s, probably because of the rising strength of teachers' unions, he said.
Many teachers criticize these bonus plans, saying they raise questions about fairness and they destroy cooperation among teachers.
"It's important to note that the form of performance pay we're looking at is linked to student outcomes rather than principal assessments," Figlio said. "One reason why performance pay based on principal assessments is not very effective is that principals are under a huge amount of pressure to say that everybody is excellent."
One proposal that links teachers' bonuses to student performance is a Florida plan that awards the top 10 percent of teachers in each school district a 5 percent bonus based on student gains on the Florida Comprehensive Assessment Test. Figlio believes such an approach, using standardized tests, recognizes individual teacher accomplishments without destroying the incentive of teachers within a school to work together.
"This is important because one of the major criticisms of performance pay systems is that teaching is a collaborative enterprise," he said. "If a principal has to identify a single excellent teacher, it could end up pitting one colleague against another."
The study also found that merit pay proposals that targeted only a few teachers for bonuses were more effective than programs in which large numbers of instructors received some kind of reward, Figlio said. "Doling out merit pay to most teachers seems to provide them with little incentive to do a better job," he said.
Figlio said he believes the ideal merit pay system would reward both individual teachers as well as teams of teachers.

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