to correct spelling of Professor Buck’s name.

Edward L. Glaeser is an economics professor at Harvard.

Should teachers be paid more if their students’ test scores improve? States that want access to federal funds through the Department of Education’s Race to the Top program must make teacher evaluations “that take into account data on student growth,” then use those evaluations to inform decisions on “compensating, promoting, and retaining teachers and principals.” Will financial incentives make our teachers more effective, or will they be yet another educational fad that comes and goes and signifies nothing?

On Thursday and Friday of last week, Harvard’s Program on Education Policy and Governance, which is affiliated with the Taubman Center for State and Local Government that I direct, held a two-day conference on teacher merit pay. I remain convinced that Race to the Top was wise to include a push for merit pay, because it shakes up the compensation status quo, which is both rigid and replete with bonuses for things, like graduate degrees, that are statistically unrelated to student outcomes. But I left the conference with little confidence in the transformative power of a federal push for merit pay.

I still believe that teachers, like pretty much everyone else, respond to incentives. There are a number of compelling papers showing that teacher incentives can significantly affect student achievement. Ten years ago, Israel’s Department of Education instituted a pay-for-performance program in poorly performing schools. Victor Lavy, a distinguished labor economist, evaluated the program and found students who were exposed to incentivized teachers passed more tests and earned more academic credits.

Karthik Muralidharan and Venkatesh Sundararaman looked at an even more ambitious program in India. Three hundred Indian schools were randomized into three equally sized groups. In the first group, teachers received incentives for improving their own students’ performance. In the second group, the payout was tied to the performance of the entire school. The third group was the control. Scores rose significantly in both groups with incentives, relative to the control group, and individual incentives were more effective than school-level incentives. Test scores rose 68 percent more when the cash payments were tied to the teacher rather than the school.



So why am I skeptical about the Department of Education’s push for merit pay? The problem is that any top-down push for incentives is easily subverted at the local level. A paper by Jay Greene and Stuart Buck provides a bevy of examples where schools said they had adopted merit pay, but in reality did anything but.

Professors Buck and Greene write of one instance in Arizona: “Algebra teachers were being rewarded merely for getting students to learn 10 percent more about algebra than they knew before studying that subject at all. This is not a high hurdle to clear.” As a result, they write, “even when a state creates a statewide merit pay program and legally bars spending the money on anything else, local school districts may still end up spending the funding on regular salaries unconnected to merit pay or on so-called merit pay programs with absurdly low standards for what constitutes ‘merit.’ ”

The famed work of Brian Jacob and Steven Levitt on teacher cheating provides yet another example of how ill-designed incentives can go awry. If the people on the ground don’t want an incentive system, they will have little desire to provide the necessary safeguards to prevent cheating that overturns that system.

Jim Stergios, the executive director of the Pioneer Institute, a public-policy research organization in Boston, discussed the paper by Professors Buck and Greene at the conference and made the quite reasonable point that it makes more sense to start with incentives for principals. Unless school leaders want change, they won’t appropriately administer any system providing incentives for teachers.

A vast body of evidence now documents the differences in effectiveness among teachers, even when those teachers face the same weak incentives. This suggests that schools could improve dramatically, even without any merit pay, if highly motivated principals had the resources to attract the best teachers and the strength to move the worst ones into other sectors. According to this view, the biggest role of student test scores may be to ensure that decisions about teacher retention are made wisely and fairly.

But it is quite possible to be both skeptical about the efficacy of any top-down Washington-led push for merit pay and to think Race to the Top did a good thing by raising the issue. In some cases, local leaders have long wanted pay-for-performance, and the Race to the Top helped give them credibility. At the very least, the program brought incentives up for discussion, and no economist can really be against that.