Study: Merit Pay in a Monopoly System Yields Limited Results

Published October 8, 2010

A study from Vanderbilt University has found teacher merit pay programs have little impact on student achievement—but critics note point out the study ignores potential system-wide effects. A team from the National Center on Performance Incentives at Vanderbilt University, led by Matthew G. Springer, conducted the three-year study in the Metropolitan Nashville Public Schools.

Using pre- and post-test evaluations, the researchers found “students of teachers randomly assigned to the treatment group (eligible for bonuses) did not outperform students whose teachers were assigned to the control group (not eligible for bonuses).” Although the study does not conclude performance pay is necessarily a poor system for compensating teachers, it does find increasing the motivation of teachers through monetary incentives in isolation from other reforms has a limited impact on student achievement.

The study, “Teacher Pay for Performance: Experimental Evidence from the Project on Incentives in Teaching,” carried out from 2006 through last year, employed random-assignment methodology to determine the impact of performance pay.

Middle school math teachers had the option to take part in the controlled experiment, in which they could earn up to $15,000 in bonus pay for raising the test scores of their math students. Researchers compared the gains made by students of teachers participating in the study to those of students across the state.

Market Reforms Called Essential
Jay P. Greene, department head and endowed chair at the Department of Education Reform at the University of Arkansas, says the Vanderbilt study leaves many questions unanswered. He noted the researchers examined only whether motivation of existing teachers was elevated by performance pay incentives; they did not investigate performance pay’s ability to draw high-quality teachers into the profession.

Greene says merit pay has only limited potential within the current system.
“We’re trying to recreate a system that naturally arises in a market,” Greene explained. “In the private sector, people are constantly tinkering with compensation systems. But of the 10,000 or so school systems, no more than a handful have something they call merit pay. And most are just pay-for-credential or across the board pay increases.”

“Doing performance pay in lieu of market-based reforms is a path to failure,” Greene said. “Doing performance pay in conjunction with market reforms is more promising.”

Merit vs. Monopoly
Greene coauthored a paper in April with fellow University of Arkansas researcher Stuart Buck, which argues, “merit pay boils down to an attempt to recreate a market system within a tightly-controlled state monopoly.”

Mike Antonucci of the Education Intelligence Agency in California is more pessimistic about the prospects for merit pay following the Vanderbilt study.

“The burden of proof is always on the performance pay side,” Antonucci explained. However, he noted, “The control group didn’t outperform the bonus group, so the report isn’t exactly a ringing endorsement of the traditional salary schedule.”

Antonucci says the study “doesn’t invalidate everything you stand for. It simply means reexamining your assumptions and methods. Just as we would expect teachers to do when faced with a poor performance evaluation.”

Success in Little Rock
Matthew Ladner, vice president for research at the Goldwater Institute, disagrees with Antonucci’s assessment. Nashville’s program may have achieved little improvement in student performance, Ladner said, but a similar program in Little Rock, Arkansas was more successful.

A two-year analysis of Little Rock’s Achievement Challenge Pilot Project found a “statistically significant, positive relationship between the performance pay program and student achievement.”

“Reformers need to carefully examine both the research and the program differences between the successful Little Rock experiment and the apparently failed Nashville experience,” Ladner said.
“The teaching profession currently offers low starting pay, a union pay scale divorced from merit, job security, and summers off. That is not a formula for attracting the most capable undergraduates into the teaching profession,” Ladner said.

“I suspect the gains from attracting higher ability students into the profession are far greater than any possible motivational effects,” he added.

A more in-depth version of the Vanderbilt performance pay study, which includes information on teachers’ opinions toward performance pay, is due out in the next few months.

Lindsey M. Burke ([email protected]) is an education policy analyst at the Heritage Foundation,