Loss Aversion and Teachers

You’ll note that I didn’t write a word about the Chicago teachers’ strike, mainly because I was pretty much against both sides. Rahm’s a bully, and teacher evaluations, if you look into them, as surprisingly tricky business. Where I live, Mongtomery County, Maryland, we have a teacher peer-review system that everyone seems happy with and that is a model for the nation. Why everyone can’t do what we do I just don’t know, but then again, we are a sane county with lots of liberal-minded people who don’t mind paying taxes as long as the services are good (they are). On the other side, I’ve long had reservations about whether teachers should have the right to strike in the first place, and I do think the unions can be resistant to positive change.

But then I heard this fascinating report on NPR this morning. A bunch of economists conducted a test based on the idea of loss-aversion, which comes to us from behavioral economics and means not wanting to lose something you’ve already gained.

They divided teachers in a poor Chicago district into three groups. Those in group one got no bonus and were asked to improve their kids’ test scores. Those in group two were promised a bonus at the end of the year provided they produced better scores. And those in group three were given a bonus at the beginning of the school year and told if test scores don’t improve, they’d have to give the money back.

Well, you know what happened. Only in the third group did scores improve, and dramatically:

In line with earlier work, List and his colleagues found that students of teachers who received the traditional bonus performed no better than students of teachers who received no incentive at all. But List found that students of teachers who were given the bonus upfront showed significant improvement in math test scores.

"What we found is strong evidence in favor of loss aversion," he said. "Teachers who were paid in advance and [were] asked to give the money back if their students did not perform — their [students'] test scores were actually out of the roof: two to three times higher than the gains of the teachers in the traditional bonus group."

Behavioral economics, gang. Lots of interesting stuff going on there.

It’s one of those slap-your-head moments, innit? I mean, of course. If somebody gives me money or a consumer good on the condition that I do A, B, and C or I have to give it back, of course I will do A, B, and C. Especially if it’s money, which is very likely to have been long since spent by the time they come knocking again. It’s incredible that it took the human race until 2012 to think of this w/r/t this topic.

Of course, the way education policy and bureaucracy work, they’ll have to study this for another 20 years, and then even if they determine that this is the way to go, they’ll argue for another 20 years about how to “bring it to scale,” as they say, by which time there’ll be some other interesting idea that negates this one. This is why I largely steer clear of education debates.