"If Pay for Performance Works": Answer for Obama

President elect Obama said "if pay for performance works" in a December 2008 press conference. That "big if" has one new answer. A three year study on teacher incentive programs revealed no impact on test scores vs. teachers not receiving incentive pay.

In Nashville, the three-year study specifically found that students whose teachers were offered bonuses of up to $15,000 annually for improved test scores in math registered the same gains on standardized exams as those whose teachers were given no such incentive.

Texas has two pay for performance efforts in education.

The National Center on Performance Incentives released a smaller study in 2009 on one of the state's programs, the Texas Educator Excellence Grant. The researchers found that the $300 million program, which the state has since scrapped, had no significant impact on student achievement gains, but teachers who got larger bonuses were more likely to stay on the job.

The Houston Independent School District evaluated their P4P program.

A 2009 analysis of HISD's bonus system found some small positive effects on student test scores. That study was done by researchers with North Carolina's SAS Institute, which is under contract with HISD to do the statistical analysis that is the basis for the bonuses.

"I would not be opposed to someone else doing that study because of the criticism that comes when a group does a study of their own work and it comes out positively," Grier said.

Two out of three studies show incentive pay does not achieve higher student test scores, while the third showed small positive effects. The jury rang in on Obama's question.

Not only is pay for performance bad management theory, it doesn't produce what it purports to accomplish. A decade of CEO stock option compensation showed widespread malfeasance. Teachers have seven years to prove they can cheat as skillfully as executives.

Next up is healthcare, where Peter Orszag said the government would "throw things against the wall to see what sticks." That includes livers. Greek Gods punished Prometheus, having an eagle pluck out his liver every evening.

A health care "pay for performance" system shares the name Prometheus. It has the same feel as managed care incentive plans in the late 1990's. Prometheus pilot sites began in January 2009. There's no word on their impact to date.

Update 4-16-11:  Naked Capitalism tackled P4P, throwing the "one size fits all" solution nicely to the dirt.  New Scientist raised deep concerns about the very foundation of pay for performance.  It quoted a research study from UK health care system, where years of P4P made zero difference in outcomes for patients with hypertension..