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Should students be paid for their academic achievements?

Editor’s Note: Students at Terra High School in Miami can earn as much as $1,000 for getting an A in a class. Yes, you read that right — $1,000. And it’s not just Terra — more than 15,000 high schools in the U.S. have begun offering such rewards.

A new app called Raise.me is designed to help colleges offer financial incentives to high school students for academic accomplishments in the form of “micro-scholarships.” Students earn money for scoring an A in a class, taking the SATs or ACTs or volunteering in the community. The amount depends on the university offering the scholarship and is conditional. If you’ve been given $10,000 in micro-scholarships to Penn State, you must apply and be accepted into the university for that money to go toward your education.

But education is not a job. Should we treat it that way? And do financial incentives reduce the intrinsic motivation for kids? Making Sen$e producer Sandy Petrykowski posed those questions to Kristin Klopfenstein, the executive director of the Education Innovation Institute at University of Northern Colorado, who studies the economics of education. You can read that conversation below. For more on Raise.me, watch this week’s Making Sen$e report at the bottom of the page. The following text has been edited for clarity and length.

— Kristen Doerer, Making Sen$e Editor

Raise.me is an app that gives high school students micro-scholarships for accomplishments, like getting an A or being captain of a team. What do you think of that concept?

The idea of financial incentives for students is growing in popularity, and there is a growing research base about the efficacy of financial incentives, but there is still a lot that is unknown. The best information that we have is from economist Roland Fryer’s 2010 study. He did a randomized control trial looking at the efficacy of financial incentives in a variety of cities with a variety of age groups. The really interesting finding from that study is that rewarding kids for outcomes like high test scores — say, we’re going to give you x dollars if you pass this test at the end of the year, or we’ll give you x dollars if you get a certain course grade at the end of the year — those outcomes tend to not be as impacted by financial incentives as when you incentivize behaviors that create habits of mind and are associated with those outcomes.

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So for example, I’ll give you two dollars for every book you read. That has a tremendous impact on reading comprehension. Incentivizing the inputs into being successful rather than the outcome, which tends to be farther down the road, tends to be effective based on the research we have so far.  And a lot of times kids, particularly from disadvantaged backgrounds, don’t necessarily understand the path from here to there. And so by  just saying, “We’ll reward you if you pass this test,” the kids might get all excited about the incentive, but then they have no idea about how to actually go about achieving that goal.

Do you think commoditizing education is a bad thing?

I think it depends on how it is done. I’m an economist, so I get to do the “on the one hand and on the other hand.” There is an argument that attaching financial incentives to education can reduce intrinsic motivation among students. I would argue that our schools are not doing a bang-up job with maintaining kids’ intrinsic motivation now, and beyond the very early years, particularly at the disadvantaged schools where there’s a lot of drill and kill, the intrinsic motivation has pretty much been beaten out of the kids already anyhow.

I think financial incentives can be really valuable when they are personalized, and when they are designed to stretch kids at an appropriate level. So kids should not be, in my opinion, financially incentivized to, say, enroll in a class, they should be incentivized to turn in homework on time. Once they’re doing that consistently, they should be incentivized to perhaps do the extra credit on top of turning it in on time. Once they’re doing that consistently, they should be incentivized to stretch a little more outside of their comfort zone. So I think it’s important how the incentives are personalized and that they actively stretch kids and don’t just become “Oh I get paid for business as usual, for what is part of my ordinary day.”

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Kids who aren’t first-generation college going and who come from advantaged backgrounds tend to know how to get from A to B. They tend to have the habits of mind and skills to be successful on the SAT or the ACT, to write an excellent college essay and to get into the school of their choice, so these kids don’t need the roadmap that these incentives might provide. They have other resources — parents and friends whose parents have gone to college, who understand the institutional system. So I think that from a policy perspective, investing money, incentivizing kids who already would have done those things anyway is a very poor use of public and private dollars given the scarcity of resources in public education.

What about kids who are struggling or who come from low-income neighborhoods?

At high poverty schools, I think financial incentives can be effective, but they must be narrowly tailored to work with the specific kind of children that they’re targeting. What that means is that there needs to be rewards for intermediate actions that lead to positive outcomes — for reading books or doing positive study skills and behaviors that will lead to higher grades. And these rewards also need to be relatively short term, because kids have a short time-horizons in general, and for kids in high-poverty, dangerous neighborhoods, it’s even shorter.

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The key findings of Roland Fryer’s work are that you reward inputs not outcomes and that you need to have this shorter time horizon. You need to have immediate rewards for these steps that teach kids the habits of mind toward academic success.

So the way the app works, if a student gets an A this quarter, she will get rewarded. That’s sort of a short-term incentive, so does this help?

But it’s still for an outcome. So yes, the timing is good; the sooner that the reward can be given relative to the achievement the better. However, that is still an outcome of “get an A in this course,” and that presumes that the student knows what it takes to get an A in that course. And there are, particularly for first-generation students, tremendous gaps in understanding about study habits, how do you get misunderstandings clarified, how do you approach a teacher to get help, when is it appropriate to get help. So the short-term reward is not the problem there, I think the problem there is you’re rewarding the outcome as opposed to the necessary steps to be successful to achieve the goal.

There’s not as much attention paid to the nuance of Roland Fryer’s argument; that would make these kinds of incentives tremendously more beneficial and cost effective.

Economics correspondent Paul Solman reports on Raise.me, which allows students to earn money for college beginning in ninth grade.

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