The cover story of this week’s TIME magazine reports on recent attempts to use financial incentives to motivate students in public schools to achieve. Much of the article is based on the research of my good friend Roland Fryer, a professor at Harvard. My friend and colleague John List also contributes a choice quote. The results from using incentives are mixed. In some cases, incentives have been very cost effective: paying elementary school children in Dallas $2 for each book they read leads to substantial test score gains. On the other hand, a number of other programs aimed at older kids have been less effective. A lot of things change across the various experiments, but one hypothesis Roland puts forth in his academic paper is that better results will be obtained when focusing on inputs that the student can directly control (e.g. turning in homework, showing up for school, wearing a uniform), instead of outcomes (test scores, grades, etc.).
It is amusing to an economist to see how controversial it is to offer financial incentives to children in public schools. We offer financial incentives to just about everyone else in society in all sorts of settings, whether it is work, sports, encouraging people to recycle cans and bottles by paying a nickel each, etc. My parents used financial incentives with me as a kid, and I use them with my children. They worked on me, and they seem to be working as a parent. For instance, a few months back I told my four kids that if any of them could beat me in a ten-hole putting contest, I’d give them $100. I’m both proud and embarrassed to say that my nine-year-old?daughter Amanda is $100 richer today, having just beaten me for the first time.