Lloyd Lofthouse

I first learned about Roland Fryer, Jr., a Harvard economist, when he devised an experiment to pay students for raising test scores in several cities, which failed. Subsequently, he seemed to be involved in other such experiments where the methodology always involved incentives for teachers or students to get higher scores. Here is an outside review of the merit pay plan he designed for New York City. Another of his less-than-successful incentive plans was called “loss aversion.” It works like this: the district gives teachers a $4,000 bonus at the start of the school year; if scores go up, they keep it. If scores don’t go up, they give the money back.

That gave me an idea: how about “loss aversion” for economists? If their predictions are wrong, their computer is confiscated. Or their pay is cut. Or they lose a digit on one finger.

Mercedes Schneider decided to…