Alex Tabarrok is blogging about merit pay for teachers. An experiment in India found that incentives for teachers have a significant, positive effect on students’ test scores.

One of the most interesting results of this study is that incentives created a spillover effect. The teachers facing incentives were rewarded if students did well in two subjects, but the benefits weren’t limited to those subjects. This is good news, showing that a little incentive can go a long way. It also indicates that the test score gains reflect real learning rather than cheating, for if teachers were to artificially inflate scores in hopes of a reward, they would have no reason to distort scores in subjects that are unrelated to the incentive.

How do incentives for one subject improve test scores in a separate subject? It could be that students are taking the skills they learned in reading or math class and applying them in other areas; students who are well-prepared in math can go farther in science, for example.

The spillover could also be because of another effect of merit pay: Incentives change the way people view their profession. When teachers are paid according to a set schedule, they may feel, “I’m just like any other teacher with the same amount of experience. We all do the same work, and we earn the same amount. I don’t need to try to be exceptional.”

But when teachers are rewarded for student achievement, they think, “My students’ success depends on my individual effort and creativity. I don’t have to wait years for a pay raise; I can get one immediately if I bring achievement up far enough. We earn bonuses because outstanding teachers are valuable, and I want to be outstanding.” This attitude can motivate teachers across all subjects, not just in the areas linked to a monetary incentive.

For more about why I like merit pay for teachers, see this recent post.