Premises:

1
Toward an Economics-Based Theory of Educational
AccountabilityDouglas N. HarrisFlorida State
University

• Premises
• (1) Current applications of economic theory to
  educational accountability make invalid
  assumptions
• (2) Disconnect between theory and empirical
  research on accountability
• Purposes
• (1) Outline an integrated economic theory of
  accountability that makes more valid assumptions
• (2) Use above theory to identify testable
  hypotheses

2
Economics and Contracts

• Traditional Aspects
• Noisy outcome measures
• Multiple outcomes
• Asymmetric information
• Transaction costs
• Reputation, dynamic contracting
• Newer Developments
• Strategic ambiguity (Bernheim Whinston)
• Ratchet effect (Carmichael and Macleod)

3
Educational Outcomes
6 Primary Contracts in Education

• Teacher
• Administrator

Student Voter-legislator
Parent
4
Contract Incentive Mechanisms
Accountability expands the incentive
mechanisms and increases use of explicit
contracts (versus implicit contracts) between
these parties
5
Some Testable Hypotheses

• Effect of performance compensation (bonus)
  increases with validity, reliability, and
  completeness of outcome measures
• Adding effort/output measures to contracts can
  increase bonus effect even when new measures are
  less valid or reliable
• The effect of government-based accountability can
  be expanded by extending it to multiple parties
• The bonus effect is larger in the presence of
  teacher tenure rules (rules limiting dismissal,
  firing)
• Effects of accountability depend on circumstances