Enhancing the Efficacy of Teacher Incentives Through Loss Aversion: A Field Experiment

36 Pages Posted: 21 Jul 2012 Last revised: 2 May 2021

See all articles by Roland G. Fryer

Roland G. Fryer

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; University of Chicago

Steven D. Levitt

University of Chicago; National Bureau of Economic Research (NBER); American Bar Foundation

John A. List

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Sally Sadoff

University of California, San Diego (UCSD) - Rady School of Management

Date Written: July 2012

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.

Suggested Citation

Fryer, Roland G. and Levitt, Steven D. and List, John A. and Sadoff, Sally, Enhancing the Efficacy of Teacher Incentives Through Loss Aversion: A Field Experiment (July 2012). NBER Working Paper No. w18237, Available at SSRN: https://ssrn.com/abstract=2114863

Roland G. Fryer (Contact Author)

Harvard University - Department of Economics ( email )

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Steven D. Levitt

University of Chicago ( email )

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National Bureau of Economic Research (NBER)

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American Bar Foundation

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John A. List

University of Chicago - Department of Economics ( email )

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United States

National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Sally Sadoff

University of California, San Diego (UCSD) - Rady School of Management ( email )

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Rady School of Management
La Jolla, CA 92093
United States

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