Pay for Percentile

We propose an incentive pay scheme for educators that links educator compensation to the ranks of their students within appropriately defined comparison sets. Because this scheme employs only ordinal information, it allows education authorities to employ new assessments at each testing date without ever having to equate various assessment forms. Thus, our scheme mitigates incentives for teachers to teach to a particular assessment form while eliminating any means of influencing reward pay by corrupting the equating process or the scales used to report assessment results. We argue that the assessments and procedures that make up performance pay systems should be separate and distinct from those used to track student progress over time. Effective incentive provision does not require the use of a reference assessment scale or procedures for equating the scales of various assessments. Further, the use of incentive systems that require equating may well introduce pressures that corrupt the equating procedures and compromise our understanding of how student achievement is changing over time.