Photo Credit: Monopoly Justice on flickr photosharing
That’s students, it was an article on excessive bonuses that caught my eye with regard to teachers. Economist Dan Ariely, in Predictably Irrational: The Hidden Forces That Shape Our Decisions takes a look at how excessive bonuses can actually pervert effects. Here’s a quote from a NY Times guest op-ed piece:
What would you expect the results to be? When we posed this question to a group of business students, they said they expected performance to improve with the amount of the reward. But this was not what we found. The people offered medium bonuses performed no better, or worse, than those offered low bonuses. But what was most interesting was that the group offered the biggest bonus did worse than the other two groups across all the tasks.
So, this definitely has implications for teacher incentive pay. If you make it small it’ll help, if you make it medium, it’s the same, and if you make it big, it’ll make it worse. In other talks he’s discussed how stressed out the folks in the India version of his experiments got when they were working towards the highest bonus (equivalent to 6 months pay in India).
He points out that this anger, resentment, worry, and stress, was echoed in financial institutions that relied heavily on bonus incentives during the last quarter of the year. I think it’s the same feeling I’ve had at during previous testing seasons.
So it turns out that social pressure has the same effect that money has. It motivates people, especially when the tasks at hand require only effort and no skill. But it can provide stress, too, and at some point that stress overwhelms the motivating influence.
When I recently presented these results to a group of banking executives, they assured me that their own work and that of their employees would not follow this pattern. (I pointed out that with the right research budget, and their participation, we could examine this assertion. They weren’t that interested.) But I suspect that they were too quick to discount our results. For most bankers, a multimillion-dollar compensation package could easily be counterproductive. Maybe that will be some comfort to the boards at UBS and Goldman Sachs.
I believe that offers like the D.C.P.S. for $100,000 salaries are the equivalent to the million dollar compensation packages that have become the norm in financial institutions, and will likely have the same effect, which is not the one we are all looking for.
Another idea he touches on is how monetary incentives can undermine social relationships. That comes from an experiment on paying late fees at an Israeli daycare center. When fines were implemented, parents started to “pay for the privilege” of a late pickup. Even after the policy reverted back to “no-fee” which it had been at the start, parents were late more often than they had been before the rules changed. Incentives perverted the social contract.
I think we need to think about this in terms of our students and high stakes testing, and how it might be intersecting with “stereotype threat”. The implications for what might happen when we implement any more incentive based pay systems, especially for teachers, are pretty clear, you won’t get what you pay for.