Principals as Agents: Subjective Performance Measures in Education

In this paper, we compare subjective principal assessments of teachers to the traditional determinants of teacher compensation – education and experience – and another potential compensation mechanism -- value-added measures of teacher effectiveness based on student achievement gains. We find that subjective principal assessments of teachers predict future student achievement significantly better than teacher experience, education or actual compensation, though not as well as value-added teacher quality measures. In particular, principals appear quite good at identifying those teachers who produce the largest and smallest standardized achievement gains in their schools, but have far less ability to distinguish between teachers in the middle of this distribution and systematically discriminate against male and untenured faculty. Moreover, we find that a principal’s overall rating of a teacher is a substantially better predictor of future parent requests for that teacher than either the teacher’s experience, education and current compensation or the teacher’s value-added achievement measure. These findings not only inform education policy, but also shed light on subjective performance assessment more generally.