Teacher Incentive Program with Loss Aversion

This teacher incentive program targets K-8 classroom teachers, reading and math interventionists in Chicago Heights, IL. Teachers are randomly assigned to receive performance-based financial rewards (up to $8,000, expected value $4,000) based on their students' end-of-year test score improvements relative to similar peers. The program tests two framing approaches: 'Gain' treatments where teachers receive bonuses at year-end, and 'Loss' treatments where teachers receive $4,000 upfront and must return money if students underperform. Within each framing, teachers receive either individual or team-based rewards. The intervention runs for one school year (2010-2011), with rewards calculated using the 'pay for percentile' methodology. Teachers attend informational meetings in October and receive midyear performance reports. No special training, materials, or classroom resources are required beyond the financial incentive structure itself.