I'm late to the party: most of the people who know stuff about stuff have already talked about this. But the National Research Council has done national research on incentives and high-stakes testing. The short version is that they find them wanting.
My favorite line from the summary: "The tests that are typically used to measure performance in education fall short of providing a complete measure of desired educational outcomes in many ways."
Larry Ferlazzo, as always, has an excellent collection of other people's writing on the topic. He promises his own commentary presently; he's usually insightful, and I usually agree with him.
I've written before about incentives, but I'm having a hard time finding those posts. This new report jves with the other research I've posted here, though. Incentives and disincentives are only good for forcing compliance. They are worse than useless at encouraging creative problem solving, which is a big chunk of what teaching is. Teaching is also compliance with best practices, gathering data, good assessments, effective instruction, etc. But how to apply those materials? What about the students that nothing seems to work for? Creatively applying what we know works is how we get the best results.
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