incentives and education

If you’ve been following Roland Fryer, you know that he’s been trying a pay for grades experiment with children in New York City. The question is simple: does paying kids improve performance? As I mentioned yesterday, the preliminary evidence is that children are more likely to participate in the test, but they are not more likely to get better grades. I noted that this does not disprove the link between incentives and performance. People in all kinds of job learn well when their pay depends on it (e.g., med school admissions, law school, armed services).

So what’s the deal with school kids? Before I get to my main point, I need to explain how learning happens:

  • Motivation: At first people, people have to want to learn the topic. This may be due to social pressure, love for the subject, or pay. Or even threats.
  • Ability: People need some minimal level of ability so they can actually do the task.
  • Training: People need to invest a certain amount of time in learning the skill.
  • Social support: You need people who can properly coach, correct and motivate you.

Now, about Fryer type experiments, where you pay kids to do well on tests. Does the pay actually address any of the issues? First, let’s assume that the kids have at least the minimal ability needed for the test. Then, the pay has to offset low motivation, the lack of training (bad teaching) and meager social support (or all of the above). With regard to motivation, it’s likely to be a moderate or weak effect for these kids. A few hundred dollars may get you one or two pairs of new shoes. Definitely something, but not a huge life changing pay off, not enough to make people want to invest the time to master challenging stuff like algebra. Not enough to divest from socializing, nor does it create a space at home in which to work. It also doesn’t magically conjure up the teaching you might need to get the most from your work.

But some of you may ask, what about those parents who “incentivize” their kids with money or threats? My argument is that (a) parents are spending a lot time persuading their kids that the pay off for study is huge (“Do well in 8th grade algebra and you get into medical school!”), or (b) parents provide additional training and social support that the student needs, or (c) in a few cases, the parents actually change the kid’s preferences for how much they want to work. Parents who pay kids for grades are just using the pay to change the kid’s entire social context. They pay itself is beside the point.

Written by fabiorojas

March 6, 2009 at 6:04 am

Posted in economics, education, fabio

9 Responses

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  1. Great point. Parents do have the ability to change kids’ social context, which is something teachers just can’t offer.
    I work in a private, alternative, special ed high school. My students brought Fryer’s little experiment to my attention, though the staff had joked about it on a couple of occasions… unable to fathom the ridiculous nature of actually following through with it!
    I see that payment (immediate gratification) will make a kid cram the night before a test in order to bring back the whole “drill and kill” style of learning. This is definitely something that works for many children. Unfortunately, it does nothing to target skills-based and performance-based tasks, or concepts.

    My students would likely respond to this at first, but it would be short-lived. Might this even be a confidence breaker? What if a kid still failed a test, despite the payment? This kid would likely gain a new-found confirmation that he or she is unable to succeed… even for money! Any thoughts?

    Great post, thanks!



    March 6, 2009 at 7:58 pm

  2. maybe if the cash incentives were more uncertain, the positive reinforcement generated would be greater. That is, if the kid wasn’t explicitly informed about the payoff upfront – but instead rewarded in small steps in an uncertain schedule (say, small rewards for good marks in tests – not regular or fixed in amount, but delivered intermittently in an uncertain manner based on sustained performance), it is more likely to generate better results… Ofcourse this would mainly affect points (1) and (3), in a virtuous-cycle kind of way. (the ‘why’ would need too much typing :P )



    March 6, 2009 at 9:40 pm

  3. I’m not sure what to make of Fryer’s project. I’m a bit torn between wanting it to work to increase access and social mobility to various positions and opportunities for disadvantaged students…but on the other hand “paying for grades” goes against all of the teachers with morals that I encountered in school. With that little digression removed, I think the whole role of punishment in schooling is an important factor that should be taken into account here.

    Imagine how powerful Fryer’s project would be if the students could not only gain money through grades, but lose it as well. You could think of it as a “floating” bank account where students could see the amount of money in their account each report card. On this balance would be the money amount for each grade. I’m not claiming to be an economist, but I’m sure they could easily create a formula to that would reward students for consistently good grades in subjects while also penalizing students for consistently bad grades in others. Obviously there are other factors that could affect this amount and the students’ performance, but that could be one modification to made to the program. I think it’s important to keep in mind how punishment during the schooling process can greatly influence students and their progress.

    Just my .02 on a Friday night.



    March 7, 2009 at 4:11 am

  4. […] Rojas at, interprets this as saying that the incentive didn’t work. The question is simple: does paying kids improve performance? As I mentioned yesterday, the […]


  5. I’m a little confused as to where my earlier reply went!
    But, my main question is this:
    Does this model discourage and demean struggling students?
    Sure, they will “drill & kill” in order to memorize all they need to know for tomorrow morning’s test – but when it comes time to participate in a performance task or apply a concept, will that information be accessible?
    When it comes down to it – I think of students asking, well, if I can’t even make money in the classroom, how will I ever make money out in the real world?
    I feel it would keep the cast system alive: the rich will get richer (because mom and dad are at home helping them with their homework) as the poor get poorer (because mom is working her second job and dad’s in jail). We’d be saying that this is okay.




    March 7, 2009 at 5:28 am

  6. Some thoughts:

    Fryer is able to try this stuff out because there is widespread perception that many public schools are failing, and so school superintendents have a strong interest in trying out some innovations. Poor kids are being especially targeted here, because they actually could use the help.

    There is a straightforward economic incentive effect, but there are also incentive effects that are more sociological in nature (this may boost the status of kids earning high grades, or it may lead kids to believe that learning is not worthwhile in the absence of cash rewards). You can’t conclusively predict how this will shake out in advance, so that’s why you run some experiments and see if it works.

    I don’t have especially high hopes for the program actually, but theoretically this can be understood as a monetary investment in education policy that may or not provide sufficient bang for the buck.



    March 8, 2009 at 12:32 am

  7. Raivo Pommer

    Teuer Geld

    Er beruft sich hierbei auf ein Urteil des Landgerichts Coburg (Az.: 23 O 426/08). In dem Fall hatten der Beklagte und seine Ehefrau zusammen einen Kredit über 21 000 Euro aufgenommen. Als sie sich scheiden ließen, vereinbarten sie, dass die Frau den Kredit zurückzahlen werde. Im Gegenzug verpflichtete sich der Mann, zwei weitere Darlehen zu begleichen.

    Diese Absprache teilten sie auch der Bank mit. Als die Frau die Tilgungen nicht leistete, kündigte die Bank das Darlehen und verlangte vom früheren Ehemann den offenen Schuldbetrag von 16 400 Euro. Zu recht, urteilte das Gericht: Denn die Absprache zwischen den früheren Eheleuten schütze den Beklagten nicht. Maßgeblich sei allein das Vertragsverhältnis zwischen der Bank und dem Mann. Der Beklagte sei durch die Scheidung oder die Abmachung der Eheleute untereinander nicht von seiner Schuld gegenüber der Bank befreit.



    March 8, 2009 at 3:15 pm

  8. Should we be luxury/consumption taxing the study algebra instead of subsidizing it?


    Hopefully Anonymous

    March 8, 2009 at 10:32 pm

  9. Good thought ‘sd!’

    Hillbilly – I have to agree that morally and ethically speaking, we definitely have problems that this is even an issue. Just imagine an environment in which people would only ‘learn’ if payed. This would certainly eliminate teaching students a ‘love of learning.’

    Just a thought.



    March 9, 2009 at 2:37 am

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