What’s Wrong With Cash for Grades?

Kai RYSSDAL: Time now for a little Freakonomics Radio. It’s that moment every couple of weeks we talk to, usually, Stephen Dubner, about the hidden side of everything. This week, though, the hidden brains behind the operation: Steve Levitt, economist at the University of Chicago. Steve, how are you?

Steven LEVITT: I’m doing great.

RYSSDAL: Well, here’s the thing: What’d you do with Dubner, man?

LEVITT: You know, I love golf. I somehow managed to convince Dubner he loves golf too. So now we’ve got to flip the coin each week to see who gets to play golf and who has to actually work.

RYSSDAL: That’s so funny, because you know what? I cannot see Dubner playing golf to save his life, but I guess that’s a whole other interview. So what do we got? We’re talking about, what, schools today?

LEVITT: We are, about incentives, about bribing kids to do better in school.

RYSSDAL: Oh good. All right, all you parents out there, get ready to write in. So what do we know about bribing kids? Does it work?

LEVITT: One great thing about kids is that they’re relatively cheap to bribe. And certainly I know, going back in time, when I was a kid, my parents bribed me. It was just a mainstay of my household, that if I did well in school, they’d give me $50 maybe for every day.

RYSSDAL: No, get out of here! Fifty bucks?

LEVITT: Yeah, I think almost. Tons of parents do that. I certainly do with my kids.

RYSSDAL: So you dangle $20 in front of them and say, “This is yours if you get an A?” How does it work?

LEVITT: One theory about that is that people in general, but kids especially, are very present-oriented, that what happens to them tomorrow or 15 minutes from now matters much more than what happens a year later. So that study that I’ve just done with some colleagues comes to kids, right as they sit down to a test, and says, “We will give you $20 as soon as the test is over if you improve your performance compared to the last time that you took it.”

RYSSDAL: Okay.

LEVITT: So we did this on over 6,000 kids, using financial rewards and using non-financial rewards like trophies.

RYSSDAL: Everybody gets a trophy nowadays, didn’t you know that?

LEVITT: Yeah, but not in our study. You should have seen the looks on the kids’ faces because one of the things we also do was we give them the trophy, we let them hold the trophy, sniff the trophy, to really enjoy the trophy. We sit the trophy right on their desk in right front of them as they take the test, and if they don’t do well, we snatch it away from them.

RYSSDAL: Oh, you do not.

LEVITT: We absolutely do.

RYSSDAL: Economists are heartless sons of guns, man.

LEVITT: It hurts more to lose something that’s yours than it is benefit to gain something.

RYSSDAL: My guess would be that the trophies work for like the 3rd graders, but once you get to junior and high school, he wants, “show me the money,” right?

LEVITT: With the young kids, the trophies worked great, the money works great. It’s harder to convince the older kids. There, only the money works and the money really works — all the time — works best when you put it in front of them, you let them see it, and then you snatch it back from them when they don’t do well.

RYSSDAL: What happens though, Steve, when, let’s say these kids go into college or they go out into life and nobody’s there handing them $20 if they do well, right? Do they lose the gains?

LEVITT: I mean, I look at my own experience — which is always dangerous — but I went away to college and my parents stopped rewarding me for getting good grades. It wasn’t like I stopped doing it. The counterargument is that you build up good study habits, hard work, and then those persist over time.

RYSSDAL: But come on, you’re a Ph.D. economist at the University of Chicago, for crying out loud. You’re not…

LEVITT: Well, I am now, but boy, you should have seen me in college. All I did in college was drink and play whiffle ball. It was a miracle I even made it through.

RYSSDAL: What do we know about boys versus girls? Is there a gender difference in how this thing works?

LEVITT: There’s a huge gender difference that we see here, which is that boys are much more responsive at all age levels to every kind of incentive we throw at them.

RYSSDAL: Boys can be bribed.

LEVITT: That’s exactly right. I think what it really comes down to, and we’ve seen this in many other settings, is that girls basically always try pretty hard. And when you incentivize them, they can’t try that much harder. But boys basically completely slack off unless the stakes are really high.

RYSSDAL: You realize, of course, you’re kind of hosing me now, because my kids are going to hear this on the radio and they’re going to say, “Dad, $20.”

LEVITT: Honestly, it is one of the best investments you can make if it really causes your children to change their behavior. I’ll give you an example. So I have a son who doesn’t care at all about school — he’s only a 3rd grader. But he had a computer-assisted math program, he spent about a total of an hour and 15 minutes on it over the first month that he had it. He asked me for $50 so he could get a new toy, and of course I said no, but then I said, “Well look, if you can finish the entire 3rd grade math program, I’ll give you this $50 toy.” He ended up spending about 40 hours over the next week doing math. He spent more time in that one week on math than he probably spent on his entire life, and we both couldn’t have been happier. The beauty is, if you take it by hour, it cost me about $1 an hour to get my kid to study math.

RYSSDAL: There’s the economist in you coming out right? Come on.

LEVITT: Yeah, it’s a great deal. I mean, compared to trying to get someone to cut my lawn or cut my hair, it was a bargain. It was a great bargain.

RYSSDAL: Steven Levitt at the University of Chicago. Dubner’s back in a couple of weeks. Freakonomics.com is the website. Steve, thanks a lot.

LEVITT: Thank you Kai.