Education is one of the rare industries with a powerful union, no incentive based pay and where generally the worst performers get more money yet is still regarded as not very good.

Improving education most would start with incentives for teachers, claims new findings by economics professors at the University of Missouri-Columbia and Vanderbilt University. They say that states and school districts in the United States begin developing programs that examine the effects of linking teacher pay to student achievement.

The study was a collaborative effort between Michael J. Podgursky, professor of economics at Mizzou’s College of Arts and Science, and Matthew G. Springer, research assistant professor of public policy and education at Vanderbilt’s Peabody College. The researchers critiqued previously published studies which evaluated the effectiveness of school district and state-sponsored merit pay systems throughout the United States, as well as programs in Israel, Africa and the United Kingdom. They found that student achievement mostly improved when teachers received financial incentives.

As a result, school districts should at least consider the idea, Podgursky said, by experimenting with performance-based systems, which require flexibility and only become effective through “trial and error.”

“We can’t say, ‘Do this; or this is the right way to do it,’” he said. “However, the preponderance of evidence, when you look at a variety of sources, including the limited number of evaluations and the evidence we have on the variation of teacher effectiveness, suggests that it really is something school districts should be exploring or piloting. Every one of the evaluations has been virtually positive. They all suggest there’s a positive response in terms of outcome measures – including test scores.”

Podgursky and Springer’s position differs from opponents who argue that unlike sales by a salesman or billable hours for an attorney, teacher performance can’t be measured or monitored or, that incentives result in competition and less teamwork by teachers.

Traditionally, teacher pay is based on a salary schedule – years of experience and education level. Nationwide, there are roughly 3.1 million teachers. Podgursky and Springer said the current salary system increases expenditures without directly impacting student achievement. In the study, he and Springer advocate school districts to emulate private sector employers which “understand that strategic pay policies are a very important lever in raising firm performance.” They said in the long run, merit pay systems result in success – for teachers and students alike.

“The system isn’t passive; the evidence certainly suggests when you offer incentives, you’re likely to get better results,” Podgursky said. “It suggests that the actors do respond to the incentives.”

The study, “Teacher Performance Pay: A Review,” will be published in the September issue of the Journal of Policy Analysis and Management.

Written from a news release by University of Missouri-Columbia