You can't be a clever country without smart teachers

My ANU colleague Chris Ryan and put out a media release today announcing a new study on the academic aptitude of new teachers in Australia. We find a pretty substantial drop over the last two decades. Here’s our abstract:

How and Why has Teacher Quality Changed in Australia?
International research suggests that differences in teacher performance can explain a large portion of student achievement. Yet little is known about how the quality of the Australian teaching profession has changed over time. Using consistent data on the academic aptitude of new teachers, we compare those who have entered the teaching profession in Australia over the past two decades. We find that the aptitude of new teachers has fallen considerably. Between 1983 and 2003, the average percentile rank of those entering teacher education fell from 74 to 61, while the average rank of new teachers fell from 70 to 62. One factor that seems to have changed substantially over this period is average teacher pay. Compared to non-teachers with a degree, average teacher pay fell substantially over the period 1983-2003. Another factor is pay dispersion in alternative occupations. During the 1980s and 1990s, non-teacher earnings at the top of the distribution rose faster than earnings at the middle and bottom of the distribution. For an individual with the potential to earn a wage at the 90th percentile of the distribution, a non-teaching occupation looked much more attractive in the 2000s than it did in the 1980s. We believe that both the fall in average teacher pay, and the rise in pay differentials in non-teaching occupations are responsible for the decline in the academic aptitude of new teachers over the past two decades.

There are some caveats to our findings – academic aptitude may be poorly measured in the ACER tests, or it might change over the lifecycle. Maybe teacher performance is amenable to development through effective training. And maybe the literacy and numeracy of teachers doesn’t really matter all that much. But if I were choosing a teacher for my child, then all else equal, I’d rather have someone with better academic knowledge standing at the front of the room.

For non-economists, I think the hardest thing to get your head around with these findings may be how earnings inequality in the non-teaching sector can lower teacher quality. The easiest analogy I can think of is to say that if all occupations were paid by uniform salary schedules, then all that would matter would be average pay. But while teachers have stayed on uniform salary schedules, the rest of the labor market is further away from them than ever before.

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14 Responses to You can't be a clever country without smart teachers

  1. Andrew C says:

    Interesting paper, anecdotally I’d agree. The solution then has to be to create incentives for the best and brightest to take a teaching degree. Financial ones, such as waving the HECS debt for the top 10% of school students if they take a teaching degree, and obviously increases in the pay for teachers comparative to other professions.

    Today the only people I know who are taking teaching degrees (that is for primary/high school level work) are those who specifically want to work with or assist children. Their heart is in the right place, but we need their minds to be there as well.

  2. Sinclair Davidson says:

    ‘Imagine you ran the economy and could choose between two options. …
    Some have said that Australia is choosing the latter.’

    It is an intersting op-ed, but the opening paragraph grabbed my attention. This is a fairly common type statement in economics, but not sure how useful it is. What does it mean to ‘run an economy’, for ‘Australia to choose a path’? It is true that our State Government, responding to the median voter (perhaps) choose to pay teachers the salaries that they do. Some may describe these salaries to be poor. But nobody chooses the overall pay scales in the economy, or the pay relativity scales across the economy. These are ex-post observable, but not ex-ante decision variables.

    I’ve always been taken by the comment, that the prime minister ‘runs’ the economy, or that the treasurer manages the economy. But I digress.

    The issue with the op-ed (and perhaps the paper) is that individuals are not allocated to professions by an omniscient benevolent dictator, but choose to become teachers etc. Presumbably they choose with knowledge of the pay scales and working conditions.

    I’m also wondering about gender issues; in the bad old days highly talented women became teachers because that was ‘respectable’ and other professions were effectivily excluded. The results may reflect the fact that smart women are no longer ‘forced’ into teaching careers. We shouldn’t forget that the average standard of all degrees has fallen over time and that the average quality of students has fallen (as numbers increase). I’m suggesting that the ACER may be very unreliable over time (I know you acknowledge that, but it is worth repeating).

  3. Andrew Leigh says:

    Sinc, I’ll leave it to others to decide whether the “central planner” analogy in the setup worked or not. Of course, it’s only an analogy – the government has to work out whether in a free market they can afford to buy the best workers for the teaching profession (an obvious point, though listening to politicians of all stripes, you sometimes wonder whether they think this way). As to the reliability of ACER, all our main results are significant at the 1% level, so we’re not just writing about statistical noise.

  4. Andrew Norton says:

    “Financial ones, such as waving the HECS debt for the top 10% of school students if they take a teaching degree.”

    Andrew C’s latter suggestion about increasing pay probably makes sense. But this one suggests that the top 10% aren’t so bright after all. Cancelling all their HECS debt would save each student about $12,000, less than the annual loss from choosing teaching over a more lucrative profession. If they are motivated by money *and* they are intelligent this won’t work.

    Ultimately if you are bright you are not going to be a teacher for the money, though there may be a certain minimum you need to meet your financial obligations. You are going to be a teacher out of a sense of vocation.

  5. Sinclair Davidson says:

    Sure, it’s an analogy and one that gets used a lot. What worries me is that students (and non-economists) get the view that government can do a lot more than they actually can. We’re not going to resolve that issue here.

    On the radio (Gold FM) this morning the DJ’s were saying, “They (thats you) have done studies showing teacher quality is falling, phone in now to talk about your teachers”. So, well done. This study is having a huge impact. When I run the economy (and I promise I won’t be a benevolent dictator) phone-ins will be banned, and music radio stations will have to play music 🙂

  6. Des Griffin says:

    Andrew, One would not dispute the evidence for the decline in literacy and numeracy. The key point is the way of improving performance. Teaching is a profession poorly regarded, poorly resourced, always told it is not doing well enough and the union in seeking more pay is trying to get money for working fewer hours.

    Your solution is to introduce merit pay. My understanding of the literature is that merit pay does not produce much in the way of better performance. In the Commonwealth, everyone on a pay for performance contract gets the bonus.

    We know what makes the difference in creative and R&D enterprises.

    I would like to know of the situations, preferably but not necessarily in education enterprises, where merit pay has improved firm performance.

    That Julie Bishop is prepared to run off with this idea is no evidence by the way. Why she didn’t look at the NSW sitation before she spoke out demonstrates the mouth controls the brain.

    This is a serious inquiry.

    Good luck


  7. Andrew Leigh says:

    Des, I wrote about merit pay in this report. I don’t think it’s a panacea, but we ought to try it before rejecting it out of hand.

  8. Anna Hough says:

    Hi Andrew,

    I was in your Policy Economics class at ANU last year. I’m a former high school teacher (who had a TER in the top 6% of NSW), now a public servant.

    The main reason I stopped teaching was that I found the classroom management side of the job difficult and stressful. Pay was also an issue, but not the central one for me.

    Teachers do deserve better pay, but I’m not sure that performance pay is the way to get more or better teachers. The main problem I see with performance pay is that it’s difficult assess or quantify performance in many jobs, but particularly teaching.

    Changes I’d like to see that might encourage more people to go into (or stay in) teaching:

    – better teacher training with a stronger focus on classroom management skills
    – a different way of allocating new teachers to schools – at present, new teachers tend to have to teach at the most ‘difficult’ schools, which is a great way to turn people off teaching
    – increased pay for experienced teachers who are willing to teach in ‘difficult’ schools and mentor new teachers
    – more research into middle school programs and ways of improving the middle school experience for students
    – better pay (but not performance pay) for teachers

  9. Damien Eldridge says:

    Hi Andrew,

    On the issue of performance pay versus an across the board pay rise (that might vary by discipline), it might be useful to differentiate between poor performance of students that result from skill shortages which are induced by declining relative wages for teachers and low effort on the part of teachers. Skill shoratages would be best addressed by an increase in the wages of teachers in the relevant disciplines. Performance pay would seem to be focuused more on increasing the effort of teachers (presuming that measured performance is sufficiently correlated with effort). Of course, performance pay might have some impact on skills shortages if it results in an increase in the wage rate that is expected to be earned by highly skilled teachers.



  10. Anna Hough says:

    Hi again, Andrew,

    Just a couple of questions for you, following on from my earlier post.

    If you were to implement a performance pay system for teachers, how would you measure performance?

    (I can see difficulties with all the types of measurements I can think of …

    – ‘valued added’ (student improvement over a given time frame) – difficulties for teachers of special needs or less able students, danger that teachers may only ‘teach to the test’ or ‘spoonfeed’ students

    – student assessment of teachers – unworkable in primary schools, danger of malicious student assessment in high schools (e.g. stricter teachers may get unfair assessments)

    – principal or other teachers assessing teachers – subjective, may create a tense and competitive, rather than cooperative, environment in schools, and the presence of other staff in a classroom affects student and teacher performance, so may not lead to a true assessment of the teacher’s ability

    Also, as an academic, would you feel comfortable being subject to your proposed system yourself?



  11. Andrew C says:

    Andrew Norton Writes – “Cancelling all their HECS debt would save each student about $12,000, less than the annual loss from choosing teaching over a more lucrative profession.”

    Be that as it is, the notion of a free tertiary education could be a big lure, especially amongst the poorer students who as has been pointed out before ( are less willing to take on the debt.

    Its also worked in the past. I had several (excellent) teachers back in my school days who say the governments willingness to pay for their degrees (in a time before HECS) if they took teaching was the reason they changed careers. With tertiary education costs beginning to skyrocket (both real and perceptually as Norton has pointed out), that lure of a free education will surely grow.

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  13. sudarwan says:

    Your comment is very good. Good luck for smart reacher

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