Ananish Chaudhuri: Paying peanuts to teachers a gamble we can't afford

Are we really willing to take that gamble with our children and the future of our nation? Photo / Christine Cornege

Should our school teachers be paid more? I think so. Because at current salaries we will have a very hard time attracting high-quality individuals to that profession.

Only those motivated by a desire to serve society at some level might step forth but possibly not too many of them.

At the University of Auckland, I teach a course called "Understanding the Global Economy", which is designed for students who are studying disciplines other than business and economics.

The course usually has more than 500 students in the class and attracts students from all over the university.

These are the best and brightest students in our community. Every year I ask them what they are planning to do after they graduate. Doctors? A multitude of hands. Engineers? Another array of hands. School teachers? And a strange hush falls over the lecture theatre.

Why? The answer is simple. The salaries are abysmal.

But how can we afford to pay them more, critics ask? The right question to ask, I think, is how can we not?

Teaching students at our schools is fundamental to our long-term wellbeing. This is where our children are spending their formative years and it is imperative that they be taught by people who are enthusiastic, inspiring and visionary. Do we get them currently? I doubt very many.

The answer is easy to understand.

Consider two job candidates. I will call them Harry and Sally.

Sally is a dynamite young person; full of ideas and ready to change the world. Harry is a bit of a plodder with limited ambitions.

Sally has decided that after she graduates she will only accept jobs that pay her $50,000 or more while Harry is content with $30,000.

Along comes a multinational company that offers $55,000 and a primary school offering $35,000. Which job do you think Sally will take? Maybe Sally is an altruist and does take the job in the primary school. But then one day Sally will meet Harry, fall in love and start a family.

She will realise that if she is to give her children the best opportunities in life then she cannot afford to be a school teacher anymore. Sally will start looking for another job that pays more.

Now think of this from the employer's perspective. Will paying more attract better-qualified applicants? This is not guaranteed but it certainly improves the odds.

Why? Suppose you are recruiting for a primary school. Harry and Sally both look like impressive young people: clean-cut, well-dressed, well-spoken.

But you know that there is a one-half chance that one of them is more qualified than the other. What you do not know is whether Harry or Sally is the better candidate.

The problem is, you cannot quite make out from the interview which of the two is more dynamic. What salary do you offer them?

If you offer anything less than $50,000 then it is guaranteed that Sally will not accept the job and only Harry will. This, in turn, implies that offering less than the minimum that Sally is willing to accept is a certain recipe for ending up with the less-qualified candidate.

But what if you offered $50,000? Will that guarantee that you get Sally? No. But it certainly improves your chances of recruiting her. Offering the higher salary radically improves your chances of hiring the better candidate because you will now be attracting a better pool of candidates - Sally, and many others like her.

Can we afford to pay our teachers more? I do not know. But are we really willing to take that gamble with our children and the future of our nation?

* Ananish Chaudhuri is Professor of Experimental Economics at the University of Auckland Business School and the author of Experiments in Economics: Playing Fair with Money.