Economist John List at the University of Chicago recently conducted an unusual field experiment inChicago Heights, a school district near Chicago. List and his colleagues found a struggling school district: Only 64 percent of students met minimum state requirements on achievement tests. Nearly all the kids qualified for free or reduced-price school lunches, a measure of straitened socio-economic conditions.

List and his colleagues, Roland G. Fryer, Steven Levitt and Sally Sadoff, divided 150 teachers into three groups. One group got no incentive; they just went about their school year as usual. A second group was promised a bonus if their students did well at math.

The third group is where the psychology came in: The teachers were given a bonus of $4,000 upfront — but it had a catch. If student math performance didn’t improve, teachers had to sign a contract promising to return some or all of the money.

Other U.S. studies have found limited evidence that traditional bonuses do much to shift student scores.

List said the idea of giving some teachers money upfront — with the threat of taking it away later — builds on a well-known psychological principle: “What we tried to capitalize on in this particular study was a concept called loss aversion,” he said. “Once we have something in our possession, we feel it would be really, really painful to have to give it up.”

Loss aversion has been shown to be a powerful motivator in many business settings, but List said this was the first rigorous test of the principle in an educational setting. The idea, he said, was that by giving teachers the money upfront, they might work harder to keep the money at the end of the year than they would if the money had been promised as a traditional bonus.

In line with earlier work, List and his colleagues found that students of teachers who received the traditional bonus performed no better than students of teachers who received no incentive at all. But List found that students of teachers who were given the bonus upfront showed significant improvement in math test scores.

(Source: NPR)