Podcast response: Moving beyond performance pay

Today’s guest blogger is Abi Adams, a doctoral student in Economics at Oxford University. She is an economics lecturer at Oriel College, Oxford and has worked on the Public Finance team at the Institute for Fiscal Studies. Her blog on the economics behind current UK economic policy debates can be found at abiadams.wordpress.com.

In his podcast on Monday, Professor Eric Hanushek extolled the merits of incentive based pay in education. I’d like to critically review his claims, and argue that, although raising the quality of teachers is a key challenge for policymakers, performance pay is not the most effective mechanism for achieving this end. The nature of teaching jobs should be transformed, rather than just their pay. Channels for career development within the education system should be created as a means of attracting the most ambitious, able individuals. Employment contracts must also be reformed to remove poor quality teachers from classrooms, quickly.

Teachers matter but how much is not clear

Hanushek starts from the premise that teacher quality matters for educational outcomes. This claim is uncontroversial. However, the quantitative significance of the effect is not as clear. There is debate surrounding the robustness of figures such as those presented by Hanushek.

First, defining and measuring teacher quality is hard. The attributes associated with being a great teacher are multidimensional, diffuse, and largely unmeasured, which clearly creates difficulty for researchers.

Second, good quality teachers are likely to be attracted to the “best” schools, which have bright students from supportive backgrounds and other favorable institutional features. Studies thus risk confounding the effect of teacher quality with other “good school” features, overestimating the magnitude of teachers’ impact.

But arguing that outcomes are independent of teacher quality is going too far. Studies that use variation within individual schools still pick up positive impacts of able teachers, and common sense tells us that there must be some link. The strength of this link, however, and thus its policy salience, is by no means empirically clear.

Incentive pay to improve selection

Assuming that we should raise the quality of teachers to improve educational standards, how should governments do this? Hanushek argues that incentive pay schemes will help. One can consider two broad mechanisms through which this reform would be beneficial.

First, motivational: incentive pay could induce greater effort on the job, making for better teachers. This is a dead-end, as Hanushek concedes. Quality in teaching among those already in the profession is at best negligibly affected by monetary incentives and at worse inversely related. Given that performance in education is multidimensional and difficult to measure, tying pay to easily observable indicators such as test scores comes at the risk of distorting energy and attention within the classroom, ultimately making for a less conducive learning environment. Greater ‘teaching for the test’ is a probable consequence.

Rather, Hanushek argues that the dispersion in rewards induced by incentive pay will induce selection of higher quality teachers into the profession. Incentive pay won’t do much for those already in the job, but by paying more, and having greater differentiation in pay levels, it is thought we will attract a different kind of person into teaching.

Hanushek states that the independence of pay and performance implies teaching is not thought of as a “profession” in the usual sense. Teachers do not face the same pressures of responsibility and accountability common in other careers, which puts off the most able candidates. Implicit in his argument is the idea that responsibility and recognition flows from differentiated rewards. It is then these job factors that make it more likely that able individuals will decide to become teachers.

Alternative ways to attract the best

However, pay differentiation is neither a necessary nor a sufficient means of making teaching “a profession” and attracting top people. Rather than focusing on pay, it may be more effective to consider transforming the structure of the job itself, building in more channels for career progression and space for personal responsibility. In my perception, the broad nature of a teacher’s current daily tasks don’t change much over time. This monotony can be off-putting to top graduates, any of whom are attracted to careers with opportunities for progression.

Education policymakers can attract ambitious job candidates by thinking creatively about how to formally build in opportunities for postgraduate study, for interactions with government, and for the development of wider education policy. Transforming pay alone cannot turn teaching into a profession in the sense described by Hanushek.

Further, although incentive pay is inappropriate in this context, performance evaluation is still obviously important in education. But what we are measuring should change. Rather than using output measures, such as test scores, to evaluate teachers, more emphasis should be placed on “input” measures to raise teacher accountability and ‘ownership’ of their job. Evaluations considering classroom atmosphere, pupil feedback, and the quality and innovation of lesson plans would foster more imaginative teaching and greater responsibility, again making for a job which appeals to more ambitious individuals.

Raising average quality involves removing poor teachers from the classroom, in addition to attracting the best. To do so, teaching employment contracts must be transformed. As Hanushek notes, evidence suggests that one’s ability as a teacher stays relatively constant over time. Either you’re good, or you’re not. The use of short term employment contracts in the early years of a teacher’s career is a good way of removing those at the bottom end of the quality distribution from the classroom quickly.


Incentive pay in education is not the most effective way for raising teacher quality. I believe a more direct and effective approach is a creative transformation of teaching jobs to explicitly allow greater responsibility and career progression to other spheres within the education system. More effort should be deployed considering how best to redefine teaching jobs themselves, rather than their pay structure.


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