Individuals’ actions are driven almost entirely by the reward, either immediate or long term, that is received from his or her action. Many studies in many different fields demonstrate this seemingly simple maxim. Sociologists and psychologists study its effect on human behavior; economists study its effect on markets and resource use. That incentives matter is nearly unquestionable. From an economic perspective, removing incentives decreases efficiency of business and society and discourages hard work. Again, many examples abound in the Soviet economies of the twentieth century and the state-run economies today. Incentives matter.
Recently while reading Charles Wheelan’s (@CharlesWheelan) book, Naked Economics: Undressing the Dismal Science, Wheelan reinforced the importance of incentives in a very important way for me as a teacher:
“Meanwhile, American public education operates a lot more like North Korea than Silicon Valley… The pay of teachers is not liked in any way to performance; teachers’ unions have consistently opposed any kind of merit pay. Instead, salaries in nearly every public school district in the country are determined by a rigid formula based on experience and years of schooling, factors that researchers have shown to be generally unrelated to performance in the classroom. This uniform pay scale creates a set of incentives that economists refer to as adverse selection. Since the most talented teachers are also likely to be good at other professions, they have a strong incentive to leave education for jobs in which pay is more closely linked to productivity. For the least talented, the incentives are just the opposite… Any system that pays all teachers the same provides a strong incentive for the most talented among them to look for work elsewhere.”
Wheelan has written about teacher pay and incentives in more detail in his 2000 article for The Economist.
Problem #1– Teacher pay rewards all teachers in similar ways, not at all related to how well teachers do their job. What metrics, other than test scores, could be used to measure and incentivize good teaching?
Another particular incentives-related problem also bothers me. Students receive a fully-subsidized public education K-12, but a free education alone is not enough to bring students to school. States compel students to attend, or else families are fined. Clearly student incentives are not working well either, or else students would attend willingly every day.
Problem #2- What incentivizes a student to come to school consistently and try his or her best? The long-term incentives are great, related to better college and career opportunities, but what keeps students performing their best every day?
A lack of teacher incentives (as producers) means a lower quality product is produced for the market. No choice among services means student (as consumers) must consume a lower quality product with no short-term incentives. Both issues, among many others, produce less than perfect options all while society generally agrees with the importance of public education and spends millions every year to fund this system.
What incentives could reasonably improve the system, from either a producer or consumer experience? I pose this question to my high school IB Economics students. Their thoughts, in relative anonymity, will be posted as part of this blog. I would love to read your comments below, too. I am certain they will provide an engaging start conversation for my students to follow.