You are here


Do Economic Rewards Work?

The jury is still out.

The love of learning—that intrinsic desire to gain knowledge and insight into new subjects—was once its own reward. That was altered decades ago when parents started using the proverbial “stick and carrot” to motivate their children to do well in school, or even just show up. Today, educators across the country have taken hold of this approach and are implementing pay-for-performance programs to motivate students to succeed academically.


The theory behind pay-for-performance programs is that “the payoffs in education are quite delayed and all the costs are up-front,” concentrating on academic matters now, instead of more pleasurable activities, according to Tom Loveless, a senior fellow at the Brookings Institution. “It is not evident to [the student] that the payoff is worthwhile or that the costs are worth the benefits, because the benefits are 10, 20, 30 years out. So the idea of an incentive program is to correct that imbalance—to give kids an immediate, tangible reward in the short term.”

And reward them, such programs are. The privately funded Learn & Earn initiative in Fulton County (Ga.) Schools launched a 15-week pilot program that paid middle and high school students struggling in math and science $8 an hour to attend its after-school tutoring program. High school students in Texas who enrolled in Advanced Placement (AP) classes were paid up to $500 if they got top scores on their math, science and English AP exams. And Opportunity NYC: Spark provides small monetary incentives to fourth-and-seventh-graders in the New York City public schools for achievement on periodic assessments.

Some incentives go beyond cash. The Wisconsin Covenant program plans to provide college placement and financial aid to high school students in the state who maintain a B average, enroll in college preparatory classes, and partake in community service. Pizza Hut’s “Book It” program rewards readers with free pizzas based on the number of books they have read. High school students in Seattle Public Schools who spent five weeks in a Washington Assessment of Student Learning (WASL) summer prep course received an iPod. Middle and high school students at San Jacinto (Calif.) Unified School District were able to win an iPod for excellent attendance. Students with perfect attendance for the year at Benton Central Jr.-Sr. High School in Benton Community School Corp. in Indiana even had the chance to be the lucky winner of a new car. In New York City, the Million program, which was piloted last year and is no longer in place, rewarded good students with free cell phones and minutes or text messaging, depending on how well they did. (Ironically, cell phones are banned in the classroom.)

Although Arne Duncan, the new U.S. secretary of education, had adopted programs that use private money to reward students for improved grades when he served as chief executive officer at Chicago Public Schools, it is Roland Fryer, an economics professor at Harvard University and chief equality officer of the New York City Public Schools, who is considered the visionary behind many of these pay-for-performance programs. Fryer has implemented many of these programs in large, urban school districts, such as New York City’s Million program, Chicago’s Green for Grade$ program, and the District of Columbia Public Schools’ Capital Gains program.

The Controversy

Previous pay-for-performance programs have been steeped in controversy. Some critics feel it is wrong for schools to reward students for being students. They argue that children and young adults must learn for the love of learning. Peter A. Spevak, director of the Center for Applied Motivation in Washington, D.C., is among them. Spevak believes the desire to do well and the positive feelings that result from doing your best every day are the true motivator, not a cash reward. Teachers, he explains, must help to empower and inspire their students. But this can only happen if teachers set expectations and model the behavior they expect from their students.

Similarly, Barry Schwartz, a cognitive psychology professor at Swarthmore College, believes “the object of education is to get kids to become a different kind of person: one who is open, curious and learning all the time. Forget incentives. If you successfully turn work into play, you don’t need to give kids rewards. Pay-for-performance programs make it harder to produce the kind of attitude toward learning that we are trying to cultivate. Not impossible, but harder.”

Schwartz believes that monetary incentives could ultimately diminish a student’s intrinsic desire to learn for nonfinancial reasons.

Other critics of the pay-for-performance approach fear that once the monetary incentives dry up, previously unmotivated students will lapse back into apathy.

Loveless counters that maybe incentives will fade out but the knowledge won’t. “Once kids have gained knowledge, you can’t take that away from them,” he says. “So if these short-term incentive programs can get kids who otherwise would not have learned something to learn fundamental building blocks—how to read, basic mathematics, basic ideas about science—those payoffs are much greater to enhance their prospects of being lifelong learners much more than any other thing that I am aware of in my years of teaching and studying research.”

Our Nation’s Capital Gains

The Capital Gains program was launched as a pilot program last October at 14 middle schools in the District of Columbia Public Schools. Under this program, developed by Fryer, about 3,000 students will be eligible to earn up to $100 every two weeks for attending each class regularly and on time, turning in homework, displaying appropriate classroom behavior, paying attention, wearing the school uniform, and earning a minimum cumulative grade point average. Based on a point system, students will be paid $2 for every earned point through this pay-for-performance program (up to 100 points per month). Sun Trust Bank has established individual savings accounts along with training in money management for these students.

According to Brian Betts, principal of Shaw Middle School at Garnet-Patterson in Washington, D.C., the Capital Gains program has great power to change students’ habits. It has helped some students get to school on time, participate in school, and be respectful to adults. “When the bell rings, we sweep students up who are left in the hallway so they can get to class on time,” Betts says. Before the Capital Gains program, 30-40 kids were caught. Now, five to seven kids are. “It has made an enormous change,” she says.

"Once kids have gained knowledge, you can't take that away from them." -Tom Loveless, senior fellow, Brookings Institution

Betts adds that the program has also sparked parental involvement that was nonexistent before, providing an “automatic metric” that makes sense to them and gives school officials a chance to gauge students’ strengths and weaknesses. “It has created this instant mechanism every two weeks for parents to measure where their kids are and how their kids are doing, which is totally based on the digits on their child’s check,” he says. “Parents have no problem picking up the phone and saying that ‘Johnny got $75 last time and only $50 this time and I would like to know what’s up.’”

By partnering with Sun Trust Bank, the program has given the district a chance to teach fiscal literacy, especially important in light of the current economic crisis. Betts believes intrinsic motivation will come around when habits are developed.

But when all his students are on free and reduced meals and most come from subsidized housing, they have had nothing to be intrinsically motivated for. “I am in the business for student achievement,” Betts says. Academically, students are paid based on their achievement in math, science, social studies and English, and they must have a 73 percent average every two weeks to qualify for the money. “The Capital Gains program allows us to reward students in a way that is important to them, while giving them an opportunity to draw a direct connection between how hard they work and how much they earn,” he says. “This is a behavior that will suit them well in the future.”


Show Me the Results

Previous studies of pay-for-performance programs have shown mixed results, however,. A study by Kirabo Jackson, assistant professor of labor economics at Cornell University, found positive results in 10 schools in the Dallas Unified School District for a monetary incentive program called the Advanced Placement Incentive Program (APIP). It found a dramatic increase in the number of AP exams taken and in passing scores. However, Rewarding Achievement (REACH), a similar program implemented in the New York City Public Schools, showed an overall decline in the passing rate for the AP exam.

"Parents have no problem picking up the phone and saying that 'Johnny got $75 last time and only $50 this time and I would like to know what's up.'" -Brian Betts, principal, Shaw Middle School at Garnet-Patterson, District of Columbia Public Schools

“Incentive programs may be good at getting people to do things that are not necessarily the right things for them to be doing,” Schwartz states. “There may be very substantial long-term consequences. I don’t think anyone knows how to get kids to be lifelong learners by using incentives. Maybe it can work in school, but maybe the only way it could work is to lower your sights about what you are trying to achieve.”

Loveless acknowledges that not much empirical evidence supports or rejects pay-for-performance incentive programs. “We don’t know the effects of these things [or] whether [incentives] work really well,” he says. “That is why we have these experiments going on, and it will be very interesting to see how these rewards will actually play out.”

How to Start Incentive Programs

Every incentive program consists of four key elements: the target group, the “carrot,” the rubric and the funding.

Incentive programs should initially target students in grades 6 through 8 because behavioral and academic problems are known to arise in the middle school years.

Students can be motivated to achieve desired behaviors through the use of various “carrots,” including privileges (pep rallies, no-homework passes, driving to school) and economic rewards (money, electronics, gift cards).

A district can design its own rubric to assess a program’s effectiveness. However, additional insight and credibility will be gained if the district partners with an established research institution such as a university or think tank.

Corporate sponsorships, university partnerships and/or grants from various foundations may provide funding for district incentive programs. In the case of funding for D.C. Public Schools’ Capital Gains program, $2.7 million was split equally by the district and Harvard’s American Inequality Lab (which receives funding from Harvard University, the National Science Foundation, the Broad Foundation, the Kaplan Educational Foundation and the Smith Richardson Foundation). However, in the end, the financial burden of an incentive program may fall squarely on the district.

Brian D. Wallace is a freelance writer based in Pittsburgh.