Researchers worked with the Chicago Heights school district and the teachers' union during the 2010-11 school year. 150 teachers joined the program and each was randomly assigned to one of five groups: 1) individual gain, where teachers received a bonus at the end of the year on a "pay for percentile" formula based on students' test score improvement, 2) team gain, where teachers received a bonus based on improvement in performance versus improvement of students taught by a "teammate" teacher, 3) individual loss, where teachers received $4,000 at the beginning of the school year and would have to return the money if student performance was less than $4,000, 4) team loss, where teachers received a bonus at the start of the year with the actual bonus based on improvement relative to the teammate teacher's students, 5) control, where teachers did not receive a bonus.
The researchers find that students whose teachers were in the "loss" treatments improved math test scores by between 0.201 and 0.338 standard deviations, relative to the control group. However, there was no significant difference in math scores between the "gain" treatments and the control group. Additionally, they reject the null hypothesis that the "gain" and "loss" treatments have the same treatment effects. There was no statistical difference between the "individual" and "team" groups between the "gain" or "loss" models.
Overall, teachers were motivated by loss aversion although the influence of attrition, cash-in-advance and potential cheating could pose a threat to this interpretation.