Incentives in the Classroom

In a recent TED Talk, Bill Gates talks about the importance of great teachers in shaping leaders. He discusses the incredible variability in quality between teachers and ultimately suggests that a new model needs to be adopted to encourage the professional development of teachers. With his business acumen and demonstrated success in the corporate world, he suggests tools that he is no doubt familiar with:

1) Employing better technology with the video monitoring of classrooms, both for the benefit of surveillance as well as for the benefit of distribution and study.
2) Smarter incentives for teachers.

I really don't like any of these two suggestions. Truth be told, I dislike them with some kind of intensity. The great teachers I've had in my life have always emphasized their respective decisions to become teachers as not being motivated by money. What happens in a classroom is a special thing that exists outside the logic of business operations. That for me is the big picture argument against both 1) and 2).

In theory, video monitoring promises great returns. How else could I have access to all the great lectures distributed for free on TED.com? But TED Talks are a peculiar case. They are lectures and not discussions. Invariably, they are not interactive with the audience. Great teachers respond to the different personalities of different classrooms spontaneously and organically. Great teachers engage the unique interests and backgrounds of their students. Videos do none of these things. Yes, videos can play a role in the dissemination of information, but great teachers do far more than engage in a one-way flow of information from teacher to student. A recorded lecture commodifies a lesson plan. I cannot be inspired by a commodity. In a video, I would never have experienced the palpable passion that Mr. Maggio demonstrated for literature. Any move towards the commodification of education goes against everything that I have learned both as a teacher and as a student.

As for its other purported purpose, surveillance, video monitoring seems to wage a silent war against accountability and trust. The trust and mutual respect in a successful classroom cannot be legislated from the outside. It has to be built from within the classroom, from the ground up. In my opinion, video monitoring would undermine teacher efforts on this moral dimension.

What about smarter incentives? For one thing, incentives require measurements. If teachers are incentivized by the measurable amount in which their students' scores improve on some standardized test, then teachers will begin to teach to the test. There are so many problems with this that I don't even know where to begin. So I won't.

Barry Schwarz says in his excellent talk that we have thus far responded to the financial crisis by trying to improve the regulatory environment and devise smarter incentives. Regulations and incentives are important, but they neglect, according to Barry Schwarz, practical wisdom. The exercise of practical wisdom takes place independently of regulations and incentives. In fact, Schwarz cites a psychological study that demonstrates how the presence of financial incentives can undermine basic goodwill and the exercise of moral wisdom. Interesting stuff. People should behave ethically because it is the right thing to do and not in order to receive some monetary reward.

Bill Gates' suggestions about how we can improve teacher quality are efforts to improve the efficiency of regulations and incentives. Something important is missing. I agree that great teachers should be rewarded and paid handsomely. The service done by great teachers is truly immeasurable. But treating education in a business manner undermines what education is all about.

Nicholas Negroponte, in his talk about One Laptop per Child, discusses his decision to make his organization nonprofit. He says one of the greatest advantages of being nonprofit is that you can attract the best people in the world. Why? Because the people that you attract by being nonprofit are attracted by the merits of the project at hand. Because people who are the absolute best at what they do are seldom motivated by money alone. In my mind, what goes for the nonprofit world goes for what happens in the classroom as well.

Is Wall Street One Big Casino?

If you are a student of economics, then conversations with other students of economics about the economy generally go relatively smoothly. But if you are a student of economics and you engage someone without a background in economics, then conversations about the economy can get messy very quickly. This is because economists take things for granted. And a lot of times, economists have a hard time explaining why they take certain things for granted.

A colleague of mine once told me that the stock market is like a casino and investing in the stock market is no different from gambling. This comment annoyed me, but I had trouble articulating why this perception was so misguided.

Well, now, as "Wall Street" is demonized in the press and described as being fundamentally separate and in opposition to "Main Street," I feel the need to go back and reconsider that statement about the stock market being like a casino. The relevant question is, Why do financial markets exist? It is a daunting question, and I won't pretend to answer it thoroughly. But off the top of my head, I come up with the following reasons:

1) To provide liquidity. What is this thing, "liquidity," and why is it important? Another daunting question, but I will try to answer it as simply as possible. Liquidity allows companies to raise funds for the expansion of their activities. Fundraising can take many forms, including but not limited to initial public offerings, issuance of bonds (debt), or borrowing from banks.

2) To allow for the smoothing of consumption. Nobody wants to have to save $500,000 before buying a $500,000 house. Mortgages and the credit market allow people to smooth their consumption and savings over time so that the $500,000 can be paid incrementally over time.

3) To allow public ownership of equity. When Karl Marx looked at the economy and its organization, he separated society into two broad categories: capitalists and laborers. The existence of Wall Street, in theory at least, fundamentally blurs this distinction as laborers can increasingly become owners of capital.

These reasons that I have listed, I am sure, are crude and full of holes. And I am sure that other reasons exist as well. But my hope is that they show at the very least that "Wall Street" and "Main Street" are not in antagonistic relation to one another. Also, despite what might appear in the press, Wall Street does not exist solely to feed the greed of super wealthy individuals and corporations. In fact, Robert Shiller, a Yale economist, argues that further expansion and democratization of financial infrastructure is required to prevent crises like the one that we find ourselves in today. To people who regard Wall Street as one big casino, that kind of proposal sounds particularly counterintuitive.

In the past, when I have been confronted with statements or questions about the economy from people without a background in economics, I have often felt frustrated over my inability to respond intelligently or intelligibly. I ascribed my failures to explain economic thinking to the failings of my own intelligence or alternatively to pitfalls in my education. I don't discount the former possibility, but I am as well increasingly convinced that more attention needs to be paid in education to the issue of communication. Economists must learn to communicate economic thinking. I think the political process in the United States would benefit at the very least as economics takes a more central role in the public conscious.

The Liberal Arts Lie

There is a growing trend to view higher education as a value-adding commodity. You go to school and you expect to come out employable, with marketable skills. Surely, education is an investment in human capital, but an overly commodified view has its drawbacks. If you view education as a value-adding transaction, then you tend towards vocational training, which adds value in concrete, measurable ways.

Liberal arts institutions fight this trend, a worthy fight in my humble opinion. Rather than cranking out employees, liberal arts colleges try to nurture thoughtful citizens, armed not with skills but with critical thinking. And this is the liberal arts pitch: at our institution, you will learn how to think, you will learn how to learn, and that is the most transferable skill possible. You will receive a broad-based, holistic education that will enable you to pursue any profession you desire. At our institution, we take a broader view of "value."

This is all nice and dandy. I enjoy learning and thinking, and my Swarthmore education cultivated my curiosity and, cliche as it might sound, a lifelong love of learning. Things get a bit messy, though, when you transition from an institution that fights against the value-added view of education to the job market. In the vagaries of the marketplace, it is unreasonably difficult to translate thoughtfulness into social contribution. I see so many of my classmates--who are smart, thoughtful, motivated and filled with good intentions--struggle to find employment where they are happy and feel as though they are contributing real value to society, or at least on their way to doing so.

I am unemployed right now, and I am sleeping on the couch of a high school friend who studied Business for his undergraduate degree. He is an investment banker taking in a handsome salary, and he just finished reading a book, titled Damn, It Feels Good to be a Banker. The author of this obnoxious book ends the preface with this sentence: "Dad, thanks for not letting me study liberal arts."

I am not complaining. There are things in my life that I value much more highly than a bank statement. And I think the liberal arts pitch is ultimately true. I am merely commenting on the difficulty of the transition from a liberal arts education to a nonacademic pursuit. And I think that it is something of a shame.