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

(Photo: vxla)

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.


The issue of bribing kids could be addressed using business ethics of competence, confidentiality, integrity, and credibility. Bribing kids shows the directing managing function of parents to movitate their kids. Business ethics would construct a fair competition between kids, and let parents keep the promise of reward.


After hearing the podcast, I felt compelled to share my experience as a parent. While it is important to keep in mind that all kids are different and there is no one-size-fits-all solution to this question, cash does seem to be a universal manipulator.

Joseph was a A/B/C student in the 9th grade when he approached my wife and I about cash for grades. He proposed that he should get paid $10 for every A (similar to what his friends were getting). I said that was insane because I wasn't about to pay him $10 for an A in drivers-ed or other classes that required little effort on his part. This proposal also didn't protect me from shelling out $20 or $30 bucks and him still ending up with a C in every important subject. I was also interested in getting him to boost his GPA, which would mean he would have to apply himself in areas that are uncomfortable or uninteresting in order to get the full reward so I put him on the following sliding scale:

1 A - $2.50
2A - $5
3A - $10
4A - $20
5A - $40
6A - $80
7A - $160

Also - All Bs are neutral. Any C takes away from an A. Any D or F cancels the full reward.

This way, if he didn't want to apply himself, I wasn't out very much, but his potential reward was twice that of his friends.

Needless to say, it worked. From 10th Grade through graduation, Joseph was a straight A student. He nearly broke the family budget for 3 years, but here are some unintended consequences:

1) He finally believed he could get straight As. This was beneficial to his self esteem and it also put me in a position to remind him that he IS smart enough to do whatever he puts his mind too. He is now a sophomore in college and going medical.

2) He learned how to study and how to manage his time appropriately to get the reward he was going for.

3) He graduated with honors and was able to get enough scholarship money for college to more than offset the costs I shelled out in cash for grades.