Freakonomics Radio - 83. What's Wrong With Cash for Grades?

Episode Date: July 10, 2012

If we want our kids to thrive in school, maybe we should just pay them.

From APM, American Public Media, and WNYC, this is Freakonomics Radio on Marketplace. Here's the host of Marketplace, Kai Risdahl. 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 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? I'm doing great.

Yeah, well, here's the thing. What'd you do with Dubner, man? You know, I love golf. I somehow managed to convince Dubner he loves golf, too. So now we got to flip a coin each week to see who gets to play golf and who has to ask to play. 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? We are about incentives, about bribing kids to do better in school. 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? I mean, 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 our household is that if I did well in school, they'd give me $50 maybe for every day. No, get out of here.

$50? I think tons of parents do that. I certainly do with my kids. So you dangle $20 in front of them and say, this is yours if you gain an A? I mean, how does it work? 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 the test, it 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. And so we did this on over 6,000 kids using financial rewards and using non-financial rewards like trophies. We varied whether we paid the kids. Everybody gets a trophy nowadays. Didn't you know that? Well, not in our study. You should have seen the looks on the kids' faces because one of the things we also do is we give them the trophy. We let them hold the trophy, sniff the trophy, really enjoy the trophy. We sit the trophy right on their desk in front of them as they take the test. And if they don't do well, we snatch it away from them. Oh, no, you do not. We absolutely do. Economists are heartless sons of guns, man. It hurts more to lose something that's yours than

it is benefit to gain something. My guess would be that the trophies work for like the third graders. But once you get to a junior in high school, he wants to show me the money, right? With the young kids, the trophies work great. The money works great. It's harder to convince the older kids. They're only the money works. And the money really works all the time. It 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. What happens, though, Steve, when, you know, let's say these kids go into college or they go out into life and nobody's there handing them 20 bucks if they do well, right? Do you lose the gains? 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. But come on, you're a PhD economist at the University of Chicago, for crying out loud, right? You're not... Well, I am now, but boy, you should see me in college. All I did in college was drink and play wiffle ball. It was a miracle I even made it through. What do we know about boys versus girls, right? I mean, is there a gender difference in how this thing works? 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. Boys can be bribed. It'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. 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. 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 third grader, but he had a computer assisted math program. He had 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 bucks 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 third grade math program, I'll give you this $50 toy. He ended up spending about 40 hours over the next week doing math. I mean, 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. I mean, the beauty is if you take it by hour, it cost me about a dollar an hour to get my kid to study math. I mean, there's the economist

in you coming out, right? Come on. Yeah, it's a great deal. I mean, compared to trying to, you know, get someone to cut my lawn or to cut my hair, it was a bargain. It was a great bargain. Stephen Levitt at the University of Chicago. Dumpter's back in a couple of weeks. Freakonomics.com is their website. Steve, thanks a lot. Oh, thank you, Kai. Hey, podcast listeners.

It's me, Stephen Dubner, coming up on the next Freakonomics Radio, the legacy of a jerk. She'll be remembered as an astute businesswoman, a rabid historian, a fascinating hostess, and a boundless creative. She loved her family, history, antiques, horses, hostess, and a boundless creative. She loved her family, history, antiques, horses, the arts, and good gossip. She was a difficult mother and a horrendous mother-in-law. She will still be missed. Well, here are some stories about Steve Jobs, too, but maybe not the stories you're thinking. That's on next week's Freakonomics Radio podcast, The Legacy of a Jerk.