What’s Wrong With Cash for Grades? (Ep. 83)

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Our latest Freakonomics Radio on Marketplace podcast is called “What’s Wrong With Cash for Grades?”

(You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript here.)

In it, Steve Levitt talks to Kai Ryssdal about whether it’s effective to pay kids to do well in school. Levitt, along with John ListSusanne Neckermann, and Sally Sadoff, recently wrote up a working paper (PDF here) based on their field experiments in Chicago schools. Levitt blogged about the paper earlier; here’s the Atlantic‘s take.

As Levitt points out, financial incentives are everywhere in life but it is nevertheless a controversial idea to talk about systematically paying schoolkids for better grades. Roland Fryer has experimented and written widely about bribing students (and teachers), and has been both praised and lambasted for it.

This is one of those issues that most people seem to assess based on their prior beliefs (i.e., it’s “wrong” to pay kids for grades because it will kill their intrinsic motivation), and the empirical evidence is at best mixed. But as Levitt discusses, there is at least some reason to think about cash incentives as one helpful tool in our educational fix.

On the other hand, Levitt knows that cash rewards don’t always work out as planned.


I must be the only one who remembers when kids got rewards from parents for good grades - like a car if you got straight As or maybe the disincentives for poor grades "No TV till your get that English grade above a C". The argument is not about incentives/disincentives but about who is going to pay and in what form!

Cor Aquilonis

I resist cash for grades because I don't really want the goal to be getting good grades, I want to foster a love of learning that translates into good grades. Fostering a love of learning and curiosity about the world in a child requires a lot more work then setting up a simple incentive system, but I think it will be significantly more valuable in adulthood. Perhaps incentivising grades will help spark the love of learning, but I think modeling interest in the world through the family would be more likely to be successful.

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I remember being astonished hen I was 13 that my grade in the art class was much better than that of the best artist in the entire school. The difference was that I turned in my distinctly mediocre paintings on time, and he often didn't even finish, but moved on to a new technique when he felt he'd made enough progress on this one. He learned more and achieved more, but I had an A- and he had a C.

A love of learning doesn't turn into good grades when grades are based on your organization of paperwork (called "turning in homework on time") and social skills ("participating in group activities") rather than knowing and learning the material. It's even worse at some schools, where grades are partly based on whether you buy a box of Kleenex for the classroom. None of that is about mastering the subject.


The problem is not with the love of learning, it is with the grades because, as you point out, most grades are only tangentially related to real learning. If you pay students for higher grades, many will find a way to get their grades to go up, but let's not kid ourselves into thinking they are actually learning more. In most cases, I venture to guess, it would cause them to start cheating sooner rather than later.


When I was a high school freshman, I was offered good money if I would just pass my math classes. You could have offered me a round-the-world-cruise and a million dollars, and I could not have ever, ever passed algebra. I tried. I really really tried. Flunked in school and flunked even worse in summer school. (Everything else? I did OK!) There are limits.


I think what would be really relevant is to hear what the incentives do with traditionally low-achieving students, students with low SES or students with any kind of disadvantage. I fear that financal incentives would increase the performance of usually good students to a big extent, but won't have a considerable effect for low-achieving students, or students with a low self-concept.
In this case, it would support the strong ones, but leave the weak ones even more behind (cf. the so-called Matthew-effect).

I consider it a big problem that a lot of new ideas in the framework of school accountability tend to increase the marginalization of students that do not meet the norm - they also deserve an education that leads them to an autonomous life within our society.

Erik Dallas

Paying kids can be used to foster further learning. The I Have a Dream program (at least in Washington Middle School in Seattle) paid the kids in the program just for perfect weekly attendance. But they paid them in their “checking account” that each kid had to balance the ledger and write checks from. These checks could be used to buy school supplies, food, or other rewards and toys that these middle school kids spent a lot of time planning on what they were saving up for and what they were going to buy. Even though the kids in the program were originally selected as the most troublesome and most likely to fail out of school, the kids were trusted to keep their own accounting, and there was no evidence of cheating. Not only was this a teaching real world math skills but also money management skills, planning, budgeting, and deferred gratification. The rewards were mostly school and nutritional items that might have gone lacking give their families economic situation, and occasionally there was that long planned purchase of a rewarding toy. This group of kids went from being at the bottom of the class to being at the top of the class. The rest of the program and the programs “cash” rewards were well spent.



My worry about cash for grades is mostly about implementation. Too many of these incentive programs try to reward 'improved performance' instead of 'high performance'. When you focus your efforts on the worst performing students, rewarding them when they get better, students just above the worst performers are encouraged to let their efforts lapse a bit, to get into the rewarded group.

I also wonder if trying to help the worst performers would lead to the most benefit. It would certainly help the kid, but I'd imagine an above average kid driven to become exceptional would have a larger impact than a poor performer driven to become average. Added exceptional performance is likely more beneficial to society than similarly reduced poor performance.


I always felt that grades tied to financial rewards was a good idea, perhaps the money is paid into accounts that generate interest ( paid to the district for administrative costs ) and can only be used for college expenses or to start a business in the community.


I might be the only teacher who has posted a comment. I teach high school math at a school where more than half the students come from low income families. (I also have a business degree from MIT and spent 25 years in the corporate world.)

In a perfect world, all teenagers would be motivated by intellectual curiosity and a love of learning. They would also see the connection between the the skills/knowledge they develop in K-12 and the careers options they will have after college. However, many students are very focused on tangible, short-term extrinsic rewards. I see no real moral problem with offering financial incentives that are tied to clear, objective forms of achievement. There are already several initiatives such as the Exxon Science and Math Initiative (which pays students who earn high scores on AP math and science exams). Also, many colleges offer merit scholarships which are essentially cash rewards for high academic achievement.



Interested in the idea of paying for grades and understand your points. However one of the few things I remember from school was a professor telling how to break your kids from playing video games. Pay them for a while for good scores. Then quit paying. "if I'm not getting paid, I won't play." My concern is I get painted into a corner when I was just trying to teach them to strive for success. Where is the disconnect?


We found that the effectiveness of paying for kids' grades was really dependent on the temperament and personality of each of our children. The first born is highly motivated and very competitive and was very responsive to this scheme. The second born - who does not really like to compete and is also is highly intelligent, perhaps a bit more creative (less linear) - didn't buy really buy into it at all. Motivating her has been far more complex over time and really only was achieved after she grew up a bit and discovered what she REALLY wanted to do - i.e not everyone is motivated by money or material possessions....

Eric M. Jones.

If you paid them enough, they wouldn't need no stinking educations....

But seriously--amongst human pursuits, only education has ALL the data available to determine the best course of action. Yet does anyone ever look at the data instead of proposing a new theory? Nooooooooooooo............

Tom M

Taking the cash away for sub-par performance has an additional benefit for the child: it may help them develop resiliency. We have a generation of young workers many of whom got a trophy for simply showing up -- managing their performance without crushing their egos is a challenge.


What is the name of the On-Line Math module you had your third grader complete? I have an eight year old lacking in math motivation so I'd love attempt your experience with him.

Please reply
Craig, Louisville, KY


let's not forget that grades themselves are actually just another extrinsic reward. So paying kids to get good grades is using an extrinsic reward to achieve an extrinsic reward. Why not make learning for learning's sake the goal instead of crowding kids' focus by dangling all these carrots in front of them?

Jim Davies

Improving grades is one goal of education, but as an educator myself I think that it's more important for education to give students a life-long love of exploration and ideas. Paying students has been tried many times before.

"...students who participate in the program will experience an enduring loss of interest in learning for its own sake."



Students should receive cash for good grades because it motivates and gives the student a reward for doing what he/she should be doing, which in this case is getting good grades. It's nothing but logical to do this!

Laura G

I'm 16 and I've never gotten rewards for my good grades. I get mostly A's and a couple B's here and there, but I wouldn't want to get paid for my grades anyway. I think it's important to have motivation for good grades due to wanting to do your best and to get far in life, not because you know you'll get 50 bucks at the end of the deal. I think I should go into life wanting to do well because I want to, not because someone is paying me to.
I don't get paid allowance either, if you were wondering.

Sure loads of kids would try harder if they got paid, but I think if someone offered me 20 bucks if I improved on a test I'd say "no thank you, I want to improve for myself, not for any money." I used to help waiters set tables at my uncle's restaurant and they'd always try and pay me for it and I'd refuse, I do thinks because I want to, not because I have money incentive.
My incentive is knowing I did the right thing, and the best I could do.