The good folks over at Marginal Revolution have yet another interesting post about Desi schools. Here at SM, we first touched on this topic when we discussed the incredible outcome differences between government and private schools – even with low income students and often at a much lower total cost per student. A post last week noted one reason for poor performance at government schools – classic public choice economics as absentee teachers discovered how to game the system to maximize their salaries while minimizing risks to their slice of the public trough.

Muralidharan

This week Alex Tabarrok points out a great study that cuts into the economics of teaching from a different angle – teacher incentives. The various teacher incentive options out there broadly work by directly compensating teachers based on tested educational outcomes achieved by their students. If poorly designed, the incentive programs run the risk of over-incenting teachers to mind-numbingly “teach to the test” (alas, even seemingly well intentioned govt policies like No Child Left Behind are often also criticized for the same thing). Still, what well designed systems do is dispel the notion that teachers are just in it for the greater good and – like all other professions – are actually motivated by pocketbook issues as well.

In this study, UCSD researchers Karthik Muralidharan and Venkatesh Sundararaman (with names like that, I suspect they’ll know a thing or 2 about the Desh), describe the results of a carefully crafted, multiyear program conducted in Andhra Pradesh (AP). The results are impressive –

We find that the teacher performance pay program was highly effective in improving student learning. At the end of two years of the program, students in incentive schools performed significantly better than those in comparison schools by 0.28 and 0.16 standard deviations (SD) in math and language tests respectively

…We find no evidence of any adverse consequences as a result of the incentive programs. Incentive schools do significantly better on both mechanical components of the test (designed to reflect rote learning) and conceptual components of the test (designed to capture deeper understanding of the material),suggesting that the gains in test scores represent an actual increase in learning outcomes. Students in incentive schools do significantly better not only in math and language (for which there were incentives), but also in science and social studies (for which there were no incentives), suggesting positive spillover effects

Equally important, the authors are able to tease apart the data and examine all different sorts of causality. For example, were the improvements the result of lower teacher absenteeism? Not particularly –

Our results suggest that the main mechanism for the impact of the incentive program was not increased teacher attendance, but greater (and more effective) teaching effort conditional on being present.

Was there cream-skimming (selecting the best students)? Not likely – first, because the initial tests were randomized and secondarily because over the the course of the test, student attrition and flow between schools remained more or less the same.

How do the solutions compare to the usual teacher’s unions mantras of “smaller class sizes” (aka, “more teachers” and thus “bigger unions”) or the general call for “increased funding for education”? Interestingly, they tested their incentive programs against these other spending options in a parallel set of schools –

We find that performance-based bonus payments to teachers were a significantly more cost effective way of increasing student test scores compared to spending a similar amount of money unconditionally on additional schooling inputs

As Tabarrok duly notes, across the board, Muralidharan and Sundaram’s research is groundbreaking in its thoroughness and unique opportunity to bring true experimental trial&error rigor into one of the most closed, hide bound, and monopolistic bureaucracies out there. It’s sad of course, that only now, after a few generations of students, that the Educational Establishment is slowly being forced to recognize something the private sector has known for a long time – folks respond to incentives.