Editing Loss aversion (section)

==Within education==

Loss aversion experimentation has most recently been applied within an educational setting in an effort to improve achievement within the U.S. In this latest experiment, Fryer et al. posits framing [[merit pay]] in terms of a loss in order to be most effective. This study was performed in the city of Chicago Heights within nine K-8 urban schools, which included 3,200 students. 150 out of 160 eligible teachers participated and were assigned to one of four treatment groups or a control group.  Teachers in the incentive groups received rewards based on their students' end of the year performance on the ThinkLink Predictive Assessment and K-2 students took the Iowa Test of Basic Skills (ITBS). The control group followed the traditional merit pay process of receiving "bonus pay" at the end of the year based on student performance on standardized exams. The experimental groups received a lump sum given at beginning of the year, that would have to be paid back. The bonus was equivalent to approximately 8% of the average teacher salary in Chicago Heights, approximately $8,000. According to the authors, 'this suggests that there may be significant potential for exploiting loss aversion in the pursuit of both optimal public policy and the pursuit of profits'.<ref>Fryer et al., [http://www.economics.harvard.edu/faculty/fryer/files/enhancing_teacher_incentives.pdf "Enhancing the efficacy of teacher incentives through loss aversion"] {{webarchive |url=https://web.archive.org/web/20120915105312/http://www.economics.harvard.edu/faculty/fryer/files/enhancing_teacher_incentives.pdf |date=September 15, 2012 }}, "Harvard University", 2012</ref> Thomas Amadio, superintendent of Chicago Heights Elementary School District 170, where the experiment was conducted, stated that "the study shows the value of merit pay as an encouragement for better teacher performance".<ref>{{cite web|url=https://www.sciencedaily.com/releases/2012/08/120809090335.htm|publisher=[[Science Daily]]|title=Student Scores Improve If Teachers Given Incentives Upfront|date=Aug 8, 2012}}</ref>