Paying Students – Examining Incentives in Education

To Pay or Not to Pay:

Examining Incentives in Education

As a young kid, I was never able to reconcile one grave injustice.  This breach of familial fairness may have even permanently tarnished my relationship with my only brother, who is two years older than me.  Now, both of us are bright, ambitious and intellectually curious.  We both love sports, politics and the never-ending debates that surround both.  My mother and father treated each of us the same, or at least they certainly tried their best, giving us equal attention and parental guidance.  And we both responded to a good incentive.

Yet for whatever reason, in one particular domain our parents treated us as differently as Americans and Europeans treat soccer. You see, whenever my brother earned an “A” in middle and high school, he was rewarded financially with a cash incentive.  And whenever I earned an “A,” no matter what the subject, I was rewarded with little more than an affirming smile indicating I had merely met expectations.  And God forbid if I ever earned a “B” during this time, I was rewarded with a panic-stricken rebuke from my perfectionist mother and a mildly concerned “talk” from my father.

In our seven years of middle and high school, my brother must have really racked up the dough, while I never saw so much as a nickel.  Protest as I may, I was given a different set of standards that, to me, seemed as arbitrary as the tax code.  My parents decided he needed extra incentive, besides the time-honored pat on the back and internal sense of accomplishment.  Ultimately, we both did very well and my brother just graduated from Franklin & Marshall College.

Though I detested the incentive imbalance, perhaps my parents were simply recognizing the basic fact that not all kids learn and think the same, and therefore, they offered each of us what we both valued the most.  Sure, Matthew liked doing well academically, but he like buying a new X-Box game or boom box even more.  And of course I liked to have extra spending money, but what stimulated me most was the intrinsic and internal feeling I got when I mastered a subject or expanded my intellectual palate.  Different values, different incentives.  As I reflect back on those days, I must admit that in our society – where the awesome power of profit has led to everything from life-saving vaccinations to the internet and the digital age – there is no logical reason not to extend this potent incentive to the world of education.

Wouldn’t Incentives Corrupt Education?

Student cash incentiveMost people would recoil at the notion of institutionalizing any sort of cash-based incentive system for students. It goes against our nation’s core principles, it seems. We should go to class and work our hardest because we should simply love learning, the purists would argue. Education is supposed to be above the corruption of politics and money.

Americans are so attached to the merit-based way of life that we collectively believe students will achieve as much as they are capable of on their own and that the public school system will sort everyone accordingly.  By the time students graduate high school, the ones with A’s are deemed intelligent and qualified, the ones with B’s are deemed average and the ones with C’s and D’s are labeled misfits or worse.  To be sure, I am a firm adherent to meritocratic thought.  But I am an even firmer believer in the mighty power of a thoughtful incentive.  After all, people do what is most likely to give them utility, and money gives most people significant utility.

However, traditional educational meritocracies make one incredible assumption: that all students derive utility from the same thing, namely, learning and achievement for it’s own sake. Yet this seems to be not only patently false, but also utterly at odds with the rest of American culture, where niche communities exist all over the place, serving the needs and wants of vastly incongruent groups.  One must look no further than the dinner table to see that one person’s tasty treat is another person’s monstrous mush.  In other words, different people have different preferences and therefore different things give them utility.

This fact is so obvious that we rarely reflect on its significance.  And while most metrics of education in this country are trending negatively – from attendance and graduation rates to math and science scores to extracurricular opportunities – society spends all its time debating traditional politics.  Should we pay teachers more, or should school-choice be the answer?  Is the government failing our students, or are America’s parents to blame for their child’s poor performance?

Consider these utterly sobering stats:

  • 7,000 US high school students drop out  every school day
  • Non-white students are twice as likely to drop out
  • 30% of US high school students dropout (in 2009)

Congress can hold as many hearings as they want on these subjects, but little Johnny in Mrs. Appleseed’s history class isn’t learning any better than he was last week.  So perhaps it is time to think creatively and innovate to help our ailing schools, especially in urban environments, where attendance rates and drop-out rates are embarrassing.  Perhaps it is time to recognize that students are people too, and people respond to different enticements because we all assign value to things differently.

10 staggering education facts infographic

Click to expand this sobering infographic on the consequences of dropping out of high school. Courtesy of

The plain reality is that if students do not even show up for class, the schools will never even have a chance to educate them.  But if providing an incentive for a perfect attendance rate for a certain period of time gets more butts in the desks, the amount of learning must go up.  They may go for the money, but stay for the learning.

Or maybe they’ll just stay for the money, but it seems to me that that is infinitely better than allowing that student to drop out, join a gang and go to prison.  By no means am I claiming all drop-outs are felons, but it is unarguable to say that drop-outs are in any way better-off than high school graduates.  Across society, high school graduates earn more money, live happier lives, get better jobs and are more productive members of society.

But don’t just take my word for it.  According to the National Association for Education Statistics, dropping out of high school is the best way to stay poor (check out the infographic to the right for more sobering stats).  In fact, compared to high school graduates, dropouts:

  • are 8x more likely to go to prison
  • note eligible for 90% of new jobs
  • earn less than half as much

Given this, shouldn’t we do anything and everything to get kids into the classroom at least, and all the way through high school ideally?

What’s the difference what it is that motivates a particular student to do well?  As long as the student is actually learning (and how to measure and determine this is an entirely different discussion), who cares why he is doing it?  Frankly, how do we know that kids don’t already continue to learn solely for the prospect of a better paying job (i.e. more money) in the future?

Without question there are many students like that at Duke, who base their course of study and activities exclusively on what will lead them to the most lucrative profession.  This is a powerful motivator for these students and they implicitly understand that to eventually attain that lucrative job they must study hard and actually learn stuff now.

Yet most people do not bemoan these students for corrupting their education with capitalist idolatry of money, even though it is highly likely that most, if not all, of these students couldn’t care less about learning for the sake of learning.  The heck with that, they might say; they’re here to get a job, which will reward them with (lots of) money.

Of course, many students certainly do study for the sake of knowledge itself, or at least the process of education whereby one can debate ideas, wrestle with intellectual problems and reach brand new insights about a subject that can illuminate a whole new world. For this group of students, the education system we currently have is just dandy.  And they get to enjoy the potential of a double-reward, one of intellectual stimulation and the other of higher qualifications and therefore higher lifetime earnings.

But it would be foolish to assume most people feel the same way.  My brother was not like this.  He certainly got something out of learning by itself, but not enough to pull out his highest potential.  He needed something else to reach his genetic apex.  So when my mother handed him a $20 bill after a good grade on an exam, he immediately associated doing well academically with a reward that he cared about and valued highly: money.

How can this association be labeled “corrupting” if it gets a student to study harder, learn more and ultimately perform at a higher level?  It’d be nice if all students did that anyway, I suppose.  But they don’t.  It’s most definitely not their fault, per se, they are simply wired differently, just as Michael Jordan was wired for basketball and not baseball (well, at least if you ask anyone other than Michael Jordan) and Babe Ruth was wired for baseball and not basketball.

Sports Mt. Rushmore

Greatness comes in many forms. Good thing Phelps’ parents didn’t force him to golf or play basketball.

We do not blame Ruth for failing to be a good basketball player; we praise him for making use of his individual skills and realizing the potential of the one thing that gave him the most utility: playing the game of baseball.  Why should education be any different?

Research has shown that some students learn best by seeing information, some learn best by hearing and seeing information, and still others learn best only by actually doing the thing they are trying to learn.  This realization has made it politically correct for schools and teachers to diversify their teaching strategies to include multi-media presentations, accommodating various styles of learning. Yet extending this same principle to the more macro-level issue of motivating students to show up in the first place is still out of bounds for most educators.

One obvious objection to any incentive system like the one I am advocating is that it might not even work.  To that there are two responses.  First, NASA didn’t know for sure in 1969 if the space shuttle would be able to land on a giant rock orbiting our planet and return safely, but they still tried anyway.  Not knowing if something will work has never been an excuse not to try, unless there is overwhelming evidence that it will not work, which is not the case here.

Second, we actually have several examples throughout the country of school districts already instituting such policies. So why don’t we look at the results?  One University of Southern California study a few years ago found that eighth-graders performed 13 percent higher on a national math exam when they were offered $1 for every correct answer.  At a charter school for delinquent students in Illinois, a $50 check for a perfect week’s attendance had a huge impact, according to Michael Grady, a St. Louis University professor of educational studies. So-called “hard-core” students now regularly attend class and are performing better.

Harvard economics professor found that incentives worked when targeted to specific activities like reading books or wearing their uniform.  The positive effect of the incentive disappeared when the students were paid after scoring well on a test.

Another study looked at the effects of giving students $20 gift cards.

Still other schools have experimented with incentives that encourage field trips, extracurriculars and other school-related activities. These cases show that if an incentive is infused intelligently, they can enhance the educational mission of the school.  This is good for the students, good for the schools and great for the community.

The negative consequences

However, there exists, of course, the potential for abuse in such a system.  Professor Grady noted that while the Illinois program has been very successful, there have also been reports of poor parents beating their children for not attending class because they want the money.  Others have reported that students buy drugs with the money.  Additionally, focusing these programs in certain areas with particular demographics could reinforce stereotypes that allege certain groups do not value education and instead only worship money.  Furthermore, such an incentive might induce a sick child to attend school simply for the money, endangering other students. And if they do miss a day at school for being sick, the incentive immediately vanishes since their record is tainted.

Finding Solutions

Each of these reasonable objections has solutions.  Parents should be included in the process, and perhaps even rewarded themselves for attending parent-teacher conferences and taking an active role in their child’s education, as some New York City schools have done.  Caving to the demographic stereotype argument is cutting off your nose to spite your face.  Surely the benefits of a genuine education trump any fleeting stereotype furtherance.

As for sick children, safeguards can be implemented to allow a genuinely sick child to skip school and not jeopardize his reward as long as he has a legitimate doctor’s note.  And should a student slip up and miss a day here or there, that would indeed remove the incentive for them for the rest of the incentive period.  But if the incentive period is weekly, or quarterly, the “incentive-gap” would be minimized as the record resets after each cycle.

Finally, if the money is held in an account given only if the student graduates – or if the money only comes in the form of scholarships or tuition grants – the odds of the money being spent on nefarious activities are diminished.

Maybe kids should want to go to school and succeed on their own. It should be enough motivation, some argue.  Maybe, but it’s not.  World hunger should be eradicated; nuclear weapons should be destroyed; wars should never occur.  But we don’t live in a Utopian fantasy world.  The lesson of America’s two-century rise is that pragmatism rules and that we must develop real solutions to real problems instead of ignoring the obvious in favor of some sterilized nostalgia of a perfect world.

Perhaps this reality has, actually, gotten worse in the last few decades.  The breakdown of traditional marriage (by which I mean only that divorce rates are rising and out-of-wedlock children becoming more common), the rise of single working mothers and the increasingly competitive global job market have all impacted the shifting priorities and values of 21st century children.

Getting Beyond Our Biases

But the current punishment-based system that chastises poor performance and bad behavior has proven to be unhelpful at best and counter-productive at worst.  No matter what the context, positive reinforcement is more effective than negative reinforcement, bar none.  As Harvard economist Roland Fryer said, “We have to get beyond our biases.

Chicago, Washington, D.C., New York City, Dallas and other cities are already paving the way for data to overwhelm those biases.  If the data confirm that a cash incentive is unhelpful, then certainly, we must move on to another idea because that is the American way.  But to stubbornly insist all students are created equal and will intrinsically value education for education’s sake is self-righteous and does nothing the help struggling communities confront their dire educational challenges.

+Cliff Satell

Note: this essay by Cliff Satell was originally written for “Philosophy of Education” a Duke course taught by Prof. Ben Ward in Spring 2010.  It has been updated slightly.