Principals as agents

"In this paper, we compare subjective principal assessments of teachers to the traditional determinants of teacher compensation ŁV education and experience ŁV 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 principalŁŒs overall rating of a teacher is a substantially better predictor of future parent requests for that teacher than either the teacherŁŒs experience, education and current compensation or the teacherŁŒs value-added achievement measure. These findings not only inform education policy, but also shed light on subjective performance assessment more generally"--National Bureau of Economic Research web site.