Making Teacher Incentives Work: Lessons from North Carolina's Teacher Bonus Program

This brief from the American Enterprise Institute offers a unique spin on today’s debate over performance-based bonuses for teachers. The authors, both economists, use research pulled from North Carolina’s ABC accountability program to advocate for school-level, as opposed to individual, bonuses. (North Carolina’s program, which began in 1996-97, offers tiered bonuses to all faculty in schools that hit yearly growth targets.) The authors argue that school-level programs ease the problems associated with individual teacher incentives: competition for the best students, the difficulties in rating teachers of non-tested subjects and grades, and statistical noise inevitable with small student sample sizes. Going further, they explain that the right benchmarks for bonus eligibility can mitigate against any free-rider effects by motivating the best (who individually don’t need to work harder for the bonus) and worst teachers (who aren’t motivated by the promise of a reward that is too far out of reach). All worth pondering, but the brief alone doesn’t make a convincing case that the Tarheel program is working. For that, we’ll need to await the full paper, which is still under review. In the meantime, technical background to the study is available here.