Academic tenure in higher education is at once a highly coveted status and a source of controversy. Permanent job security exists in few other disciplines, yet there are reasons to suspect it may be uniquely beneficial in the world of academia. For instance, it may preserve academic freedom and allow institutions of higher education to economize by compensating faculty with a significant non-monetary benefit. However, opponents of tenure suggest that it is an inefficient use of university funds, whether public or private, because the acquisition of tenure removes the incentive for professors to teach or research as effectively. In this study, we develop an economic framework to better understand the impact of tenure on the incentives and actions of faculty. Our model suggests that acquiring tenure reduces teaching quality. We test this prediction empirically using survey data acquired from tenured and untenured professors at Boise State University. We explain teaching evaluation outcomes as a function of whether or not an individual has academic tenure, using statistical methods to control for other that may influence teaching quality, such as years of experience and department. These results may justify exploring alternative compensation models in higher education.