Incentives and Change in Education 

Largely absent from the literature which has identified critical shortcomings in the implementation of localization is the topic of incentives. In facing teachers who, “...have been bombarded with changes (and who) tend to be exhausted, and find it hard to keep up their energy, enthusiasm, and ultimately, willingness for change...” (UNESCO, 2002; 36- 37), we need to identify the most universal of solutions that can be feasibly enacted to both motivate and inspire policy change that localization demands.

David Figlio explains succinctly, “...educators respond to incentives” (2011; 1). In repeated studies conducted in both the developed and developing world, researchers have found that, “...incentive pay may motivate teachers to improve their performance” (Lavy, 2009; 1980). Changes in educational behavior were further noted by Lavy as genuine as a response to incentive pay, and were shown to have, “...induced improved effort and pedagogy, “ as well as “...increased responsiveness to students’ needs” (1981). Recently, in their trials in India in which teacher salaries were tied to attendance, Duflo, Hanna and Ryan have affirmed that, “...teachers are responsive to financial incentives” (2012; 1241).

In the identification of incentives as a critical factor that must be introduced in localization programs, the nature of the incentives themselves need to be focused upon. The focus of literature has been on individual vs. group-based incentives for educators; concerns over free-rider problems for group incentives (Lavy, 1981), as well as enhanced responsiveness to individual over group incentives as seen by other researchers, lead us to focus our attention on individualized incentives for teachers.

Muralidharan and Sundararaman have noted in their studies that individualized incentives were, “effective in improving school learning,” and that there was, “no evidence of adverse consequences as a result of incentive programs” (2008; 2). Their research points out that after the second year of trials, “...individual incentive schools significantly outperformed the group incentive schools” (2) and that the key factor behind the improvement in performance was, “...greater (and more effective) teaching effort...” (3). Additionally, the authors note that that incentive programs that they were testing were relatively more cost effective, than other input variables that were tested (3).

In specifically defining the parameters of performance pay and individualized incentives in their relation to localization and schooling inputs, we must focus on the core characteristics that must define effectiveness with incentives. Leigh notes, “...incentive schemes are often very complicated...” (2012; 1), and if teachers, themselves, do not understand the nature of the incentive schemes, they will ultimately fail along with the broader policy innovations they are supporting. The incentives need to be designed, as Muralidharan and Sundararaman have shown, around the individual, teacher-level, and attention must be focused on moving away from using only standardized tests as a measure of performance for teachers, as Leigh states, “...teachers most dislike merit-pay schemes that rely on standardized tests” (13). Thus, a more holistic design, based on standardized testing as a measure of student achievement, but also encompassing supervisory performance appraisals, portfolios, self-evaluation, as well as, and perhaps most crucially overlooked in the literature, student appraisals, and when possible, parent appraisals of teacher performance (Goe and Croft, 2009; 3. Innovation in evaluating the implementation of individualized incentives is a topic that deserves additional research.

We must consider the basic definition of merit pay for teachers as, “...encompassing instances in which teachers receive temporary or permanent salary increases for being more effective in the classroom (Leigh, 1), and understand the basic expectation of individualized incentive pay, as Leigh continues, as being defined two- fold as, “... providing stronger incentives for teachers to work harder, and by encouraging more effective individuals to select into the teaching profession” (2).

In the design of effective incentive programs which must incorporate (though not be restricted to) the specific area of curriculum localization and localization programs, the role of incentives as a motivating factor for both instructional quality, professionalism, and creating a working environment which “...encourages improvement in the real practice of teaching” (Healey and Destefano, 10) is absolutely critical. In looking at the motivation of teachers as a critical factor in decentralization (Degrauwe, et all 2005, 1), in the taking on of additional responsibility and tasks that are demanded by these localization programs, we arrive at a basic point which has been overlooked almost entirely in this research area: increased workloads demand increased incentives.

Porter found that in determining the effectiveness of implementation in educational innovations, a huge hindrance was simply, “...implementing a project that increased the workload of those involved” (1980; 81). As Bjork notes:

The new responsibilities prescribed for teachers in LCC documents demand that educators develop new curricula, design original lesson plans, familiarize themselves with innovative instructional strategies, and meet regularly with members of the community. All of those duties require additional investments of time..." (2003; 205).

Policy planners and localization designers have neglected this critical and simple lesson; increasing the workload and demands on educators requires related shifts in compensation. As Stiglitz notes:

People are not machines. They have to be motivated to work hard. If they feel that they are being treated unfairly, it can be difficult to motivate them. This is one of the central tenants of modern labor economics...which argues that how firms treat their workers-including how much they pay them-affects productivity (2012; 1).

In the last decade, the government of Rwanda, one of the world’s poorest nations, has introduced performance-based financing in the public health sector. Analysis of this program has shown that incentive payments can, in fact, be successfully deployed in nations with weaker levels of administrative capacity, and effectively improve public service levels while avoiding perverse incentives for public sector workers (Rusa, Schneidman, Fritsche and Musango, 2009; 192).

Thus, in looking at teachers as workers in governmental firms, we must approach their motivations and sense of equity in the internalization of increased workloads and localization policy expectations through this lens of incentives. Incentive pay has been shown to be effective in both the private and public sector; introducing these mechanisms is critical to the success of localization projects targeted at improving educational outcomes in the developing world. Teachers must be motivated like any other workers. 


Bjork, Christopher. “Local Responses to Decentralization Policy in Indonesia.” Comparative Education Review. Vol.47 (2). Pp. 184-216. 2003.

Duflo, Esther, Hanna, Rema, and Ryan, Stephen. “Incentives Work: Getting Teachers to Come to School.” American Economic Review, Vol. 102: 4. Pp. 1241-1278, 2012.

Figlio, David. "Freakonomics Online Quorum."Freakonomics. Freakonomics, 20 Sept. 2011. Web. 24 July 2012. <>.

Lavy Victor. “Performance Pay and Teachers’ Effort, Productivity, and Grading Ethics.” American Economic Review, 99 (5): 2011.

Muralidharan, K. and Sundhararaman, V. “Teacher Performance Pay: Experimental Evidence from India.” Program on Education Policy and Governance Working Paper Series. CESifo Conference Center Presentation, May 2008.

UNESCO Asia/Pacific. “Building the Capacities of Curriculum Specialists for Educational Reform.” (Final Report of the Regional Seminar: Vientiane, Laos 2002). Bangkok: UNESCO, 2002.