Wednesday, August 1, 2012

Last Stand for Children First: More on Using Loss Aversion with Teachers

Last Stand for Children First: More on Using Loss Aversion with Teachers:


More on Using Loss Aversion with Teachers

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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