Wednesday, August 1, 2012

More on Using Loss Aversion with Teachers

In the movie Goodfellas, Martin Scorsese gave a good demonstration on how you could use loss aversion to run a business.   The idea is, giving somebody something and then threatening to take it away if certain goals aren't met is far more effective than just promising people something if they meet those goals.  For teachers, this has obvious implication for merit pay schemes where teachers are handsomely rewarded at the beginning of the year, but then forced to give the money back if their students do not achieve on standardized tests.

Loss aversion sounds like a new principle in economics, but it is actually quite old and only appears revolutionary when it is applied to education reform.  One way that employers have successfully used loss aversion is by having corporately run cities like Hershey, PA or the Pullman District of Chicago.   By making employees shop at a company store, you could guarantee that employees would do all they could to keep the boss happy.   Can't we do something like that with school supplies?   Teachers sure buy enough.  You were grading papers all weekend? F you.  Pay me.  Your class is upset because a classmate was shot? F you. Pay me.  Your class is all made up of children living in poverty? F you.  Pay me.

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