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Paying for Performance - The Economics of Student Achievement:

Harvard economist Roland Fryer is undertaking an impressive experiment in education reform: paying students for performance. According to Scientific American:

Can educators find ways to encourage students to engage in the kind of effortful study that will improve their reading and math skills? Roland G. Fryer, Jr., an economist at Harvard University, has experimented with offering monetary rewards to motivate students in underperforming schools in New York City and Dallas. In one ongoing program in New York, for example, teachers test the students every three weeks and award small amounts--on the order of $10 or $20--to those who score well. The early results have been promising.

As Fryer explained back in 2004, "for years white parents have been giving their kids money for As, now we are trying the same system for black kids." He also notes that preliminary findings show that no other change in education policy increases student test scores so much per dollar invested.

Financial incentives for students are a possible solution to a crucial problem in education: students must be motivated to do the work despite their generally short time horizons. Most of the benefits of a good education won't accrue to children until years after the fact. Yet children and teenagers have notoriously short time horizons and many are unwilling to work hard today for rewards that they can't enjoy until many years later. Fryer's financial incentives represent one possible way to give students more immediate rewards for studying hard. As he points out, middle and upper class parents have often used such rewards for studying for their own children, so the idea is not completely novel.

Like Fryer (see link below), I have a special personal interest in this subject. Similar to him (but with much less excuse) I was a terrible student for much of my school career. Although I knew that good grades were important for getting into college, this was too distant a reward to motivate me very much. What turned my situation around was high school debate. If I worked hard on a debate topic for 2 or 3 weeks, I could win a prize at a tournament at the end of that time. And I could go to as many as 10 or 12 tournaments each academic year, which meant getting as many as 10 or 12 prizes, and (more importantly) the prestige that went with them. Although tournament trophies (like Fryer's $10 cash prizes) are trivial in value compared to the long-term benefits of education, they were an immediate reward that provided quick gratification to my teenage mind. Over time, learning to work hard on debate issues also led me to study harder in other classes.

It would be wrong to generalize from my potentially atypical experience. But if Fryer's experiment continues to produce good results, it might more generally validate the theory that paying for performance works in education as well as in other areas of life.

Obviously, it might be better if students loved learning for its own sake or if they were willing to work hard just for long-term rewards. Unfortunately, however, much of what students need to learn in school is not likely to be interesting to all students, and I highly doubt that we can persuade the average child or teenager to radically alter their short term orientation.

For more information on Fryer and his research, see here.

NOTE to GMU students: To head off the inevitable question - no I won't be instituting this policy in my law school classes. I hope that by the time students get to GMU Law, they have longer time horizons than I did when I was in high school!

Waldensian (mail):
What is the evidence that teens have "shorter time horizons" than adults? How does one measure such a thing?
9.1.2006 1:26am
therut:
I would instead take away all Federal Free money ie grants and make students pay for their education with either loans or working for the money. That is the only way they will ever appreciate their education. Otherwise for many it is a payed vacation for dummies and drunks.
9.1.2006 1:39am
David Malmstrom (mail):
Therut, how would that work with k-12 students?

I remember being rewarded for my grades up to and through high school. The transition from studying as a means to monetary compensation to studying for my future benefit hit me very late, not till college. The positive reinforcement of money was effective, though the negative was much more of a motivation (that has some obvious obstacles in public school). In high school I knew where I would be going to college my junior year and I pretty much had a sure shot - same goes for undergrad - once senior yr rolled around I had less motivation because I already had my law school selected. The period between high school and senior yr of college was where I truly hit the books in an ex ante fashion... well then, and of course now.
9.1.2006 2:19am
FXKLM:
It would be much cheaper and probably more effective if we administered beatings to kids with poor grades. Money for the highest grades won't help motivate the kids at the bottom of the class; they know they're not going to get any money anyway. Maybe a combination of money awards for the highest grades and beatings for the lowest grades would work to motivate everyone.
9.1.2006 2:23am
zooba:
FXKLM: Why don't we just sterilize the bottom of the class? Three generations of imbeciles are enough, right?
9.1.2006 2:41am
Enoch:
It would be much cheaper and probably more effective if we administered beatings to kids with poor grades.

One of my coworkers grew up in Afghanistan, where beatings for poor performance were standard procedure. He said beatings were remarkably effective in stimulating a drive to succeed...
9.1.2006 2:47am
Christopher M (mail):
Interesting. What do the libertarians in the room think about this? It seems profoundly anti-libertarian to me. This is paternalistic distortion of the basic market mechanism with government funds obtained through confiscatory taxation, right? Is there any reason that libertarians, when thinking about public policy (as opposed to their private predilections or interests), should especially care about the problems of African-American kids as opposed to anyone else?
9.1.2006 2:54am
FXKLM:

FXKLM: Why don't we just sterilize the bottom of the class? Three generations of imbeciles are enough, right?


First off, I wasn't entirely serious. Secondly, what you are suggesting does not at all follow from what I suggested. You're saying that the bottom of the class is beyond hope. I'm saying that they can improve if they're properly motivated.

I think it's a legitimate concern that an all-or-nothing cut-off can't be used to motivate most students. You'll have a large number of students who are already above the standard and therefore won't be motivated to improve or the standard will be high enough that it will be out of reach for a large number of students. If the program is used on any significant scale or with any significant variation in the achievement level of students, it's going to be very difficult to find a payoff structure that motivates everyone and is not prohibitively expensive. A system with both carrots and sticks is far more flexible. If you can think of a better idea for a stick than a literal stick, I'd love to hear it.
9.1.2006 3:09am
David Schraub (mail) (www):
I was a pretty good HS student throughout, but as a debater I know exactly what you mean. And more importantly, I've seen many, many kids who've had the exact same experience--for whom debate really kicked their entire schol career into gear. I firmly believe that HS debate is--far and away--the most valuable experience any policy-minded young adult can engage in.

David Schraub
Walt Whitman HS Debate (Congress and LD) '04
9.1.2006 3:14am
therut:
My mother tried to buy my brother to get better grades and it did not work. I never got a dime and was a straight A student. I did wonder why I did not get 5.00 for an A. I asked her and she said I did not need 5.00 to make the grade. He did not do better with the carrot. He only did well when he got married and had 2 children and finally figured out he needed a college education. Which he got and payed for himself. It was not easy but he did it and for the right reason and it worked out well for him.
9.1.2006 3:20am
legally naive (mail):
I think it's a legitimate concern that an all-or-nothing cut-off can't be used to motivate most students. You'll have a large number of students who are already above the standard and therefore won't be motivated to improve or the standard will be high enough that it will be out of reach for a large number of students. If the program is used on any significant scale or with any significant variation in the achievement level of students, it's going to be very difficult to find a payoff structure that motivates everyone and is not prohibitively expensive. A system with both carrots and sticks is far more flexible. If you can think of a better idea for a stick than a literal stick, I'd love to hear it.



A payoff for improvement rather than meeting a fixed standard works well for some people e.g. swimmers who strive to get personal records, but have no chance of winning a meet. I paid one child for better grades until he started to get A's regularly ... worked for him.
The stick can be tied to lack of improvement. The easiest system is to retain the student in a group studying whatever he didn't learn. Forcing the non learners to take summer school works too. The only problem is a few kids can't learn very well and they become identified publicly.
9.1.2006 4:05am
Donald Kahn (mail):
I think it is a great idea. Improving the performance of a disadvantaged student is not only a benefit to him, but also to the commonwealth because he will become a more productive citizen.

Education is the most important opportunity that a young child has. Anything that may help him take advantage of it, should be offered.
9.1.2006 4:51am
Ambrose (mail):
I've raised six kids and one thing I learned is that all kids are different. There is no one size fits all solution. Beatings are a problem, not a solution. Perhaps the Afgan "solution" mentioned is one reason their society is such a mess today.
9.1.2006 8:16am
Daniel Chapman (mail):
I was amused by the claim that "no other change in education policy increases student test scores so much per dollar invested." I guess by this logic we should start heating the schools by burning twenty dollar bills.
9.1.2006 9:03am
wb (mail):
Get real - the number of people who study for the "sake of learning" is damned small. Most see learning as a means to achieve a social or financial end. Fortunately many people have sufficient ego strength to believe they are fully capable of realizing those ends. Ego is certainly strengthened during a person's developmental years. For those unsure of themselves as young adults, reinforcement, approval, and encouragement encrease the motivation to perform and to expect success. That is why the rewards need not be more than tokens -like $10. Fryer's results are not so surprising, and I applaud his giving this idea a try.

Those who talk about beatings etc. ought to move out of the nineteenth century (or maybe they need some sense beaten into their skulls.)
9.1.2006 9:04am
PersonFromPorlock:
It sounds like a good idea... pay people to work!... but it'll probably get 'cheaped' to death. The rewards will be reduced as the school board discovers it 'needs' the money elsewhere, eventually someone will say "why pay students for doing what they ought to be doing?" and the whole thing will turn into certificates of achievement run off on the office copier.
9.1.2006 9:05am
Mike M (mail):
Incentives of all kinds can help. One of my sons much preferred to watch TV. I told him, "Fine, for every hour of reading you do you can watch an hour of TV." That also worked, but much as Ambrose said, each kid was a new experiment in learning -- us of them and them of us. We had to force my stepdaughter to ease off and play hooky for a day!
9.1.2006 9:07am
AppSocRes (mail):
It's worth pointing out that school children in this country -- particularly poor ones -- are greatly rewarded by the private sector for NOT concentrating on their academic work. Most of the kids you see behind the counter, e.g., in McDonalds, are not doing their homework and are working hours that they make up by asleeping in the class room. Student surveys suggest that this is an ubiquitous problem.

Perhaps in addition to the carrot of financial incentives for good grades we ought to consider the following "sticks" for poor performance: (1) extra hours of school during weekdays for poorly performing students; (2) extra weeks of school during summer vacation, etc. for the same; (3) weekend school classes for the same; (4) Public boarding school for the worst students, the worst absentee students, and the most disruptive students; (5) Strict enforcement of child labor laws and a requirement that students receive a minimum GPA before they are granted a work permit.

The advantage to these "sticks" is that they are negative reinforcers favoring academic performance whose effects are: (1) immediate; (2) relate rewards and punishments directly and immediately to academic performance; and (3) affect adolescents not just in monetarily, but more importantly in the relative prestige granted by peers. Particularly among African-American and Hispanic students, making academically productive students the ones with free time and cash resources, is critical if these students' role models are going to become academic performers rather than pimps, drug dealers, and low-life rap stars and sports figures.

My experience parallels Ilya's. I was very smart. School was totally boring. I nearly wound up repeating 6th and 7th grades. Then I won a competetive science competition and gained some status. I discovered that I could use my intelligence to win science and math contests and cash in with prestige among my peers. I wound up a Westinghouse semifinalist with a guaranteed slot in a good university.

Beyond personal anecdote, the clinical and field research demonstrating that adolescents have: (1) extremely short time horizons; (2) very high internalized discount rates; (3) extremely over-optimistic assessments of probabilities of good things happening to them; and (4) a sense of personal exceptionalism, e.g., "I don't need good grades, I'm going to be an NFL draft choice.", is overwhelming. No one with any knowledge of this field -- I have done occassional work on issues that include adolescent substance abuse and criminal behavior -- doubts this.
9.1.2006 9:24am
Lively:
I pay my kid to practice her violin. She gets $0.25 per sheet of music she practices. Doesn't sound like much, but she receives more that $20 each week doing this. She is 11 years old.

Many times, she will want to go see a movie...and will not have the money. So she sits in front of a music stand and plays her pieces over and over until she reaches $10. Her playing is incredible. At first, she didn't like it, but now she has a skill that no other 11 year old has and she is very proud of it.

Since she was doing so well, I added to other instruments to her instruction. She does not get paid for practicing piano or clarinet, but she likes them both and sees the pay-off at the end.
9.1.2006 9:41am
Sasha (www):
The way it worked for me was that I was never payed for doing good. Instead, if I ever did even remotely bad, I was severely punished. This sort of motivated me up to high school.
9.1.2006 10:21am
billb:
Christopher M: Who says that the money needs to come from the government? Plenty of private foundations invest in education, so it seems to me that one that wanted to get the most bang for its buck might give this a shot.
9.1.2006 10:38am
Helen (mail):
I've often thought about the possibility of tying academic achievement in a real way to the possibility of moving on. What I have in mind is something like the International Baccalaureate Program diploma, based on standard examinations of course content, not "aptitude." Students would be required to achieve the "middle years" certificate (generally around age 16) before they could get a work permit or driver's license. Most importantly, however, the upper level program (a two-year program after which students have achieved a level roughly comparable to finishing the first year of college) would be offered on a different campus -- probably the community college campus. There would be far fewer rules and regulations, and less scheduling rigidity. You could maintain order under these circumstances because you would have weeded out the troublemakers who haven't buckled down and finished the courses and exams for the middle years program. And the state colleges and universities would require entrants to have finished the upper level program before they enter. Many college-level courses of study could be completed in three years rather than four, with this preparation. (No, not engineering or pharmacy, but many liberal arts majors could be.)

The motivations for achievement are the possibility of getting out of the "high school" environment as soon as possible, and the ineligibility to drive or work until you did. (There would also have to be minimum age requirements for driving and working because some bright students would achieve the middle level academically as young as 11 or 12. But these young students could then study on a community college-like campus, probably more safely than at a four-year school, for the next year or two. And we would probably allow driver's licenses and work permits for 18-year-olds, whether or not they completed the middle years program, but if they're still working on it, they couldn't drive to the high school-type campus.)

Many people object to the "international" requirements of the IB curriculum, and perhaps an American testing service could develop and publish something more politically acceptable. There's a lot of international precedent for levels like these: O-levels and A-levels in the British system, the two school certificates in the Australian system, and even the "SAT II" and "Advanced Placement" exams that ETS administers here.

The plan has carrots and sticks. It measures student achievement, and probably even saves money by motivating students to get on with things faster.
9.1.2006 10:39am
JRL:

As Fryer explained back in 2004, "for years white parents have been giving their kids money for As, now we are trying the same system for black kids."


Hey. I never got money for my As. I want reparations.
9.1.2006 10:56am
JohnO (mail):
I took algebra when I was in 8th grade. My school had one class of kids who took algebra, about 25 of us. About halfway through the year, the teacher started seating the class each Monday in test average order. The was a motivator for those of us at the bottom of the class.

Of course, in some ways the ones at the bottom of the class were the "worst of the best" because only 25 kids were selected to take algebra so I'm not sure if this type of motivation would have any effect on the bottom of a more represetnative class.
9.1.2006 10:59am
MDJD2B (mail):
<i>Is there any reason that libertarians, when thinking about public policy (as opposed to their private predilections or interests), should especially care about the problems of African-American kids as opposed to anyone else?</i>

Try this.

There are 30,000,000 African-Americans (A-A) in the United States. To the extent that a significant proportion of them exist in an underclass based on A-A considerations (discrimination, cultural factors, whatever), it affects everyone else. You and other libertarians are affected by crime generated by an underclass, by a poorly trained and motivated work force doing your work, by their importation of drugs into society (your kids may come to use them), and by other such social ills. This is aside from the non-economic impact on quality of life generated by having a lot of alienated and disaffected A-A people around. The same would be true of any minority many of whom are easily identifiable by their physical characteristics. Please note the chronic and acute problems in the French slums.

Many A-A children live in circumstances in which almost all adults lack education and in which education is hnot highly valued. If they can be motivated to greater academic achievement, they would contribute more to the overall society. The additional hope is that the social ills would encourage identification with and assimilation into the broader society.

(Of course, the mutual interdependence of everyone in society leads to a critique of libertarianism as a principle for public policy, but that is another issue.)
9.1.2006 11:20am
Volokh regular:
Yet children and teenagers have notoriously short time horizons and many are unwilling to work hard today for rewards that they can't enjoy until many years later.

Very small children may naturally have much shorter time horizons than adults, but when you see this in older children the number one culprit is television.

no other change in education policy increases student test scores so much per dollar invested.

Actually, throwing away the television costs nothing and would probably produce a greater return. Even better, why not use the money saved from the cable bill to pay for better grades? This approach may be the most cost-effective of all.
9.1.2006 11:45am
A.C.:
The "stick" in my family was the threat of being sent to parochial school, which had uniforms. I've always despised skirts and liked blue jeans, so staying in my no-uniform public school was a high priority. But now a lot of public schools have uniforms too, and that wrecks the whole incentive structure.

Payment for A's? Don't make me laugh. I don't actually think there was ANY incentive for getting higher than a B. Failing was unacceptable, but being too brainy was questionable for a whole different set of reasons. I went for the A's anyhow, partly in a spirit of rebellion against the sports obsession that the people around me all had.
9.1.2006 12:12pm
Ken Arromdee:
Actually, throwing away the television costs nothing and would probably produce a greater return. Even better, why not use the money saved from the cable bill to pay for better grades? This approach may be the most cost-effective of all.

Throwing away the television is one of those "cures" which only seems plausible because parents can attempt to set priorities for their children that they'd never set for themselves.

The parents would never throw away their *own* television--because they recognize that a balance needs to be set between productive activities and nonproductive activities and completely removing a class of nonproductive activities makes sense from a cost/benefit point of view, but not from a human point of view.

(And isn't it funny that you never see anyone say "completely doing away with football would cost nothing and produce a good return"?)
9.1.2006 12:23pm
zak822 (mail):
"Federal Free money"? Ain't any. Not for most students anyway.

After reading the piece and the comments, I can only say that people have very strange views about what motivates students. Maybe someone should ask the kids about this instead of pontificating from a safe distance.
9.1.2006 12:40pm
Edward Wiest (mail):
Actuallly, my kids' [charter] school does hand out incentives to students, who get tickets (exchangeable, on condition of good behavior, once a week for trinket-like toys) for either following school rules or exhibiting effort, rather than for academic performance per se (which, as Ilya implies, can't be measured that well on the K-1 level I've had the chance to observe). My twins are certainly enthusiastic about the program,(although their parents could do without the bouncy balls, gummy animals and (for really good performers and savers) 4-function calculators available for purchase). No one has told us, however, that this practice is being studied by any academic.
9.1.2006 1:26pm
Volokh regular:
Throwing away the television is one of those "cures" which only seems plausible because parents can attempt to set priorities for their children that they'd never set for themselves. The parents would never throw away their *own* television....

Perhaps I could have been more clear that I meant discarding television generally in the home, not removing only a spoiled child's personal television set. But surely complete removal of TV was implied by reference to the savings in the cable bill? At any rate, if parents find that they, or their children, tend to waste time watching TV, it is prudent to deal with a shortage of self-control in this area by removing the temptation altogether.

Furthermore, The brain does reshape its structure and functioning in response to stimuli, so it seems wise to remove anything unnecessary, such as television, that tends to produce short attention spans.
9.1.2006 1:29pm
reneviht (mail) (www):
I think a modified version of this plan could work. No money just for getting A's, though - A's are far too easy to get for this plan to encourage learning and develop a work ethic.

Instead, a straight-A report card would allow a student to take some financially-rewarded extra assignments. If the student isn't getting straight-A's, they shouldn't be spending their time getting money (although I suspect one could design a good program where extra assignments could make up for grades botched in the past). Of course, these assignments should be both genuinely challenging and educational beyond busywork. My experience with public schools is that the "genuinely challenging and educational beyond busywork" requirement is more than they can handle.

Full disclosure: I slept through elementary school getting A's and B's, and started on an algebra text in 6th grade at my mother's insistance. By 8th grade, I stopped caring about grades, and ended up needing a "no video games until your next report card comes with straight A's."
9.1.2006 4:31pm
cfw (mail):
I had similar positive experience with interscholastic debate at Vanderbilt - quite worthwhile, and pretty fun.

Prizes make sense for motivating good academic performance - look at the Nobel prizes, Pulitzers, prizes for the church in Florence (Brunelleshi's Dome) in the Renaissance.

Caveats - what is sauce for the goose is sauce for the gander. If we have a "pay for performance" system for undergrads and below, should we have a similar structure for the teachers and professors? Does the tenure system undercut the idea of pay for performance? Do contracts with teachers' unions need to be shaken up a bit?

Second, should we encourage Universities to be more sports blind in admissions?

Perhaps offering scholarship money for basketballers or footballers should be fine, so long as equal money is offered for debaters or computer scientists, or nanotechs, or geneticists, etc. - sort of like Title IX for scholars (or geeks, if you prefer).

I see more and more advanced education in the high schools. Also US colleges will get more and more focused on "pinnacles of expertise" for all four years. As the next recession emerges more clearly, the US idea of "finding" one's niche while in college will give way to the English system of knowing that one will study economics (or law or biology, etc.) from crossing the college threshold.
9.1.2006 5:38pm
Marty H. (mail):
I've always thought that something along the line of "If you want a driver's license before you turn eighteen you have to pass a high school exit exam" would be a powerful motivator for teenagers.
9.1.2006 6:00pm
dweeb:
The interesting thing about this is that "no other change in education policy increases student test scores so much per dollar invested." What is unique about this investment is it is the only one that recognizes the student's motivation as the independent variable. All the other approaches focus on better credentialed/paid teachers, more amusing curricula, reinventing the school, etc. - i.e. responding to student failure by placing the onus for change everywhere but on the student.

Students CHOOSE to succeed or fail, or at least choose the actions that lead to success or failure.

Maybe, we should pay the students serious money for good test scores (like $400 for an A, $300 for B, etc.), and let them tip their teachers based on how much they think the teaching contributed to their success. Merit pay all around!
9.1.2006 6:43pm
Ken Arromdee:
Perhaps I could have been more clear that I meant discarding television generally in the home, not removing only a spoiled child's personal television set.

This answers part of my objection, but only part.

You seem to be saying that children should watch no TV because TV is useless and takes up time that could be spent on something useful. If so, that same reasoning applies to a host of adults' and childrens' activities. Taking that to its logical extreme means kids should be forced to stay in their room and study during every waking hour.

So I don't think you mean what you're literally saying. But I *do* think there are some hidden premises here--that for some unexplained reason, TV is orders of magnitude worse than other nonproductive activities--that are carefully being left out.)
9.1.2006 7:10pm
Jim Anderson (mail) (www):
Those "shorter time horizons" have a neural correlative. Our instant-on culture probably doesn't help, either.
9.1.2006 7:12pm
sksmith (mail):
"As Fryer explained back in 2004, "for years white parents have been giving their kids money for As, now we are trying the same system for black kids." "

This was hilarious. Race baiting even when unnecessary and when it serves no apparent purpose. What -is Race baiting is in Harvardites blood-they can't not do it?

Steve
9.2.2006 9:37am
ned (mail):
Did anyone heren't read Alfie Kohn's "Punished by Rewards", a long diatribe about the paradoxical and inconsistent results of extrinsic rewards? A caution to Lively - you might be "extinguising" your daughter's desire to practice violin (unless, of course, you can continue to increase the amount paid for practicing). Students paid to write poetry wrote less poetry six months after the experimental (paid) period ended.
9.2.2006 10:08pm
erik (mail):
CFW asked, rhetorically: "If we have a "pay for performance" system for undergrads and below, should we have a similar structure for the teachers and professors?"

American University Professors DO have such a system. The fact that tenure is only awarded to top researchers is one such prize. Moreover, raises and bonuses are earned by professors post-tenure by further publication. Most importantly, really big raises are a function of receiving outside offers from other good universities, which offers are presumably influenced by one's reputation and publication record. In some cases, the top professors in the university can earn as much 4x or 5x the salaries of the least eminent members working in the very same departments.
9.4.2006 2:18am
dweeb:
You seem to be saying that children should watch no TV because TV is useless and takes up time that could be spent on something useful.

Or he could be saying that TV is uniquely designed to reduce attention span and dispense caustic pop culture that devalues education.

Or he could be pointing out that neurological research has shown that TV viewing in the first two years of life negatively impacts brain structure needed for verbal reasoning.
9.5.2006 6:17pm
dweeb:
I've always thought that something along the line of "If you want a driver's license before you turn eighteen you have to pass a high school exit exam" would be a powerful motivator for teenagers.

How about, "if you ever want to drink, drive, vote, own guns, or breed you have to pass the exam?"

Motivator, AND societal protection mechanism.
9.5.2006 6:19pm