Why paying kids to get good grades is a bad idea

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I cringed this morning when I read the piece in the Wall Street Journal about schools paying students to get good grades. The writer points out that such programs have had mixed results, and hangs his story on a new study of a 12-year-old Texas program. He writes:

In Texas, high-school students enrolled in Advanced Placement classes who got top scores on math, science and English tests were paid up to $500… The research, by C. Kirabo Jackson, an economics professor at Cornell University, found that over time, more students took Advanced Placement courses and tests, and that more graduating seniors attended college. Most of the gains came from minority students in the 40 high schools studied, accounting for about 70,000 students in all…

Previous data collected by the nonprofit Advanced Placement Strategies Inc., which runs the Texas program, found that in the 10 schools where it was initially launched, passing AP test scores doubled in the first year, quadrupled in the second year and have continued to increase. The program is now used in 61 schools statewide.

But exactly how much the cash incentives contributed to the improvements remains unclear. Teachers in these districts received additional training and bonuses of up to $10,000 when their students scored well. So it’s inconclusive whether paying the students, rewarding the teachers or a combination of these led to the improved test scores.

That inconclusiveness isn’t stopping the rush to copy the program: six states (Arkansas, Alabama, Connecticut, Kentucky, Massachusetts and Virginia) will start doing the same thing this year, thanks to $13 million grants from the National Math and Science Initiative.

The reason this particularly bothers me is because earlier this year I read a book by the Duke economist Dan Ariely. In a chapter titled “The Cost of Social Norms,” he documents how people will do a lot of work for no money, since they are getting social rewards. For instance, the respect of your teachers and parents for getting a 5 on the AP Calculus exam.

Once you introduce money to a situation, though, social norms get replaced by economic ones. This is deeply problematic, as Ariely explains in this video:

In his book, Ariely describes an experiment with a day care center that was having a problem with parents showing up late to get their kids. The day care instituted a fine, but it didn’t work well. Why not? As Ariely writes:

Before the fine was introduced, the teachers and parents had a social contract, with social norms about being late. Thus, if parents were late—as they occasionally were—they felt guilty about it—and their guilt compelled them to be more prompt in picking up their kids in the future… But once the fine was imposed, the day care center had inadvertently replaced the social norms with market norms. Now that the parents were paying for their tardiness, they interpreted the situation in terms of market norms… Since they were being fined, they could decide for themselves whether to be late or not, and they frequently chose to be late.

The real problem, though, came later, when the day care center dropped the fine. Social norms—the guilt parents felt at being late—didn’t automatically return. In fact, when the fine was dropped, late pick-ups actually rose slightly, because both the social norm and the fine were gone. “Social relationships are not easy to reestablish,” Ariely writes. Which is why I cringed.

UPDATE: In response to yeah man’s very valid point in the comments section below, I’ve written some more about this in a new blog post here.