Risky Business

Some of my current and former students, along with a colleague from the Economics department, have a new article in Education Economics called Risky business: an analysis of teacher risk preferences.  Daniel H. Bowen, Stuart Buck, Cary Deck, Jonathan N. Mills & James V. Shuls used techniques from experimental economics to measure the risk aversion of graduate students seeking degrees in education, business, and law.  They found that people training to become teachers are significantly more risk-averse than those seeking careers in business or law.

The greater risk-aversion among prospective teachers was a function of two forces.  First, women make up a much larger proportion of prospective teachers and women tend to be more risk-averse across all graduate students.  Second, the smaller group of men seeking to become teachers are significantly more risk-averse than men pursuing other professions.

This article captures the first part of Dan Bowen’s dissertation.  Dan followed-up this experiment by using the same technique to measure whether teachers drawn to schools after merit pay plans are adopted tend to be more risk-prone than the teachers previously working at those schools.  He found that they were — merit pay attracts more risk-prone teachers.  He then linked these measures of risk-aversion to test score growth achieved by the students of each teacher.  Somewhat unexpectedly, he found that the more risk-prone teachers attracted by merit pay tended to be less effective in producing student test score gains.

Dan’s dissertation raises important questions about the composition of the teaching workforce and what is likely to be effective in motivating them.  In general, his work casts doubt on the appeal of merit pay given that generally risk-averse teachers are not attracted by merit pay and risk-prone teachers who are attracted by potential bonuses may not do well in a workplace where non-monetary goals appear more prominent.  This work is consistent with an earlier article that Stuart Buck and I published on how merit pay is not a promising reform strategy.

Dan is currently a post-doc at Rice University and is on the job market.  In addition, to his work on teacher risk-aversion and merit pay, Dan and I have collaborated on research on the effects of field trips to art museums and the effects of sports programs on student achievement.  At Rice Dan is continuing to work on merit pay evaluations and is assembling a study of the effects of student field trips to a Holocaust Museum.  Dan has a variety of rigorous and innovative studies that are generating grant support. He would make for an excellent hire.

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4 Responses to Risky Business

  1. Reblogged this on James V. Shuls Blog and commented:
    Jay highlights my new study Risky Business.

  2. Greg Forster says:

    I wonder if risk-tolerant teachers in general would produce lower test score gains, or only the particular kind of risk-tolerant teacher attracted by merit pay. Indiana Jones and Rene Belloq are both risk-tolerant, but they’re not the same kind of man.

    And of course there’s also the question of whether there’s a tradeoff between test scores and other desired educational outcomes!

  3. Do risk-averse teachers communicate their attitude to students? That is,is the next generation more risk averse than they would be if children were homeschooled to age 12 and then continued their education on the job, like Thomas Edison?

  4. Steve K says:

    If I may speak as a teacher. I changed careers in my late 20s to become a teacher. I worked in business for five plus years preceding that and received two promotions from my original position in that time. I also started coaching basketball during my fourth year in business. I would come home from work uninspired by my job. But post-basketball (practices or games) I was energized.

    While the notion may be laughed at by some, I felt more personally rewarded when I worked with teenagers than I did in my office job. I willingly accepted a 50% pay cut when I switched careers. I did not reach the same level of income in teaching as I had in my last year of business until I reached my 11th year in education. I still know I made the right decision.

    While I know I am a sample size of one, I can tell you that many teachers just want the opportunity for an income that makes it so we don’t have to worry about day-to-day expenses. We know we won’t get incredibly rich doing this job. The study above reflects, in a different way, that many teachers are not motivated by the prospect of an extra $5k. I could care less about the extra money. If I was to get $5k I’d prefer that it was dumped in my classroom for student resources, like toward Chromebooks or something.

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