Incentives: simple is cost-effective
The article ‘Designing Effective Teacher Performance Pay Programs: Experimental Evidence from Tanzania’, authored by Isaac Mbiti (University of Virginia), Mauricio Romero (Instituto Tecnológico Autónomo de México) and Youdi Schipper (Twaweza, AIGHD), has been published in The Economic Journal. Find the full paper here and here (manuscript version).
We use a nationally representative field experiment in Tanzania to compare two teacher performance pay systems in public primary schools: a ‘pay-for-percentile’ system (a rank-order tournament) and a ‘levels’ system that features multiple proficiency thresholds. Pay for percentile can potentially induce socially optimal effort among teachers, while levels systems can encourage teachers to focus on students near passing thresholds. Despite the theoretical advantage of the tournament system, we find that both systems improved student test scores across the distribution of initial learning levels after two years. However, the levels system is easier to implement and is more cost-effective.
Why this study matters
In low-income countries, only 8 per cent of school-age children are expected to learn minimum secondary school level skills by 2030, and 69 per cent are not expected to learn minimum primary school skills (https://report.
At the same time, high rates of teacher school and classroom absence have been documented across several low-income country settings. These effort indicators imply large fiscal costs to taxpayers, because of the large numbers of teachers employed. They are confirmed by qualitative reports: “The vast majority of regional and district education officials indicated that the low levels of societal respect for the teaching profession combined with the low requirements to join the profession have resulted in a large number of teachers in the workforce who are either unlikely to respond to efforts to increase teacher motivation and morale or who are only likely to respond to tangible and extrinsic incentive mechanisms.” (OPM, EQUIP-Tanzania, Baseline Report, 2015).
These HR and accountability challenges, in combination with the low and stagnant learning outcomes, have led to renewed interest among policymakers and researchers in incentive systems that link payments to frontline service providers to objective measures of performance. But how should such systems be designed and implemented? This paper provides an answer, comparing the effectiveness of two alternative systems that both aim to improve student learning outcomes by offering cash incentives. The lessons of this study have informed the design and implementation of subsequent larger-scale versions of the KiuFunza performance pay program in Tanzania, and have provided learning benefits for many thousands of students.
Mbiti, I., Romero, M., Schipper, Y., 2023. Designing Effective Teacher Performance Pay Programs: Experimental Evidence from Tanzania*. The Economic Journal, forthcoming, published online 2023, https://doi.org/10.1093/ej/