Should You Pay Your Children for Good Grades?

Should You Pay Your Children for Good Grades?

This is a guest post from Suba Iyer.

I grew up in India. We didn’t have a concept of weekly/monthly allowances. If we needed anything we would ask our parents. If they felt it was reasonable and affordable for them, they would buy us the stuff. We never handled cash on our own other than the occasional birthday or other holiday money. No one got allowances, so we didn’t miss it either.

When I first came to the US and heard from my friends about the allowances they got from their parents, I was amused. Why would someone pay a kid just because he/she lives with them? I didn’t understand but I didn’t have an opinion on that one way or the other, so I just filed it away as one of the cultural thing in the US. Then recently I revisited this concept when I stumbled upon a “cash for grades” experiment that paid school kids based on the grades they got.

That got me thinking. Money is one of the great motivators for making people work hard or for getting something done. So why not extend that concept and pay underperforming kids at school and incentivize them? But do I really want my kid to put a dollar value on everything, including expected behavior like chores they should be doing anyway to keep their living space clean? What are the pros and cons of this approach?

What does science say?

As I mentioned earlier there are a couple of studies that measured the impact of paying kids to do well in standardized tests. The premise is quite simple – kids were rewarded either with money or trophies. The reward was either given: (1) before the test with the condition that it will be taken away if the performance doesn’t live up to the expectation, (2) immediately following the test, or (3) promised at a later time.

The result was generally positive, with test scores improving if the kids were rewarded. What is more interesting is the way each one of these scenarios worked out.

  1. The size of the reward matters. Kids worked harder if the reward was $80/hr vs. $40/hr.
  2. Rewards that were framed as losses (e.g., you get a fresh $20 bill handed to you before the test, if you don’t get an ‘A’ on the test, you lose the $20) worked well. Loss aversion turned out to an excellent motivator.
  3. Non-monetary rewards like trophies worked best for younger kids.
  4. Delayed gratification never seems to work. If the rewards were promised with a delay, it was not very effective in motivating a better performance.

From these individual scenario outcomes, I feel like we are sending kids a wrong message – work for instant gratification.

Yes, paying kids for good grades helps

I can see some advantages in paying for performance.

Performance pays. After all, throughout our adult life we are paid for performance, why not start at childhood?

Money is an excellent motivator for most people. Most of us work for money, we budget to save money, we look out for more money making opportunities. Whether we accept it or not, money does act as a strong incentive in our lives. What is wrong with teaching kids about working hard, getting paid and managing that money wisely? Don’t most of the financial mistakes we commit during our youth occur due to a lack of financial knowledge?

Some kids need all the motivation they can get. In India I know a few people who send their kids to school only because the school provided free lunch. Otherwise, the kids would have gone to work with their parents. In the US, there are lots of underprivileged kids who are the first in their families to go to college. They could use every ounce of motivation they can get. If the money helps the family and keeps the child in the school, why not?

No, it shouldn’t be encouraged

I can find as many disadvantages to this concept to balance out the advantages. The main ones being:

It sends the wrong message. All of us have extrinsic motivation (influenced by outside rewards) and intrinsic motivation (a genuine interest in doing the best). If they always come to expect some reward for their performance, doesn’t it entirely kill any intrinsic motivation the child should develop?

It doesn’t serve the purpose. Tests are developed to measure knowledge. If the only goal is to get better grades, it is possible to just memorize things instead of actually learning about anything. A child can get a perfect score and still be void of any knowledge.

And finally, Shouldn’t we encourage kids to put their best efforts in everything they do regardless of rewards?

Should you pay your kids for better grades?

Every child is different. Some people get motivated by rewards, some are motivated by recognition, and some do the work because they enjoy it, no matter what the outcome is. I feel if someone is going to reward better performance, it is important to understand what motivates each child.

I do not have kids, so I cannot comment on which is a better parenting approach. I can see both sides of the coin but would love to hear from parents. What do you think? Does paying children for good grades help in the long run? Or does it send the wrong message?

14 Responses to “Should You Pay Your Children for Good Grades?”

  1. Anonymous

    I agree with this article because I am having a debate at school and i’m using this topic and it helps me understand my argument better.

  2. Anonymous

    Wow, $20 for an A+?!? My Dad offered my oldest brother and I one dollar for every A we got in high school. (This was over $25 years ago) Anything less, we didn’t get paid for. After he realized we both were getting A’s every semester, paying the other two younger kids for good grades went by the roadside. It made an impact, too… They didn’t do as well in school.

  3. Anonymous

    While I was never paid for grades, I do understand that there are pro’s and con’s to that type of practice, which I think you’ve outlined very well here.

    Certainly, as adults, we’re all expected to perform at work in exchange for income, so why do we hold different expectations for children and students? On the other hand, it would be nice to reward children with praise and other types of reinforcement that can help them build their intrinsic motivation.

    Loss aversion, as you said, is a powerful motivator. This is certainly true in investing: people are more afraid of loss than they are of missed opportunity. Finding ways to apply that fundamental piece of data to the way in which we reward children could be very useful.

  4. Anonymous

    Each child is different so you need to build a model that motivates the child. The only downside to the pay for grade is if a child isn’t a good student or discovers that he/she can’t reach the higher grades apathy may set in. The child may take the approach “I can’t get the money so I won’t make an effort.”

    I think rewarding hard work and grades might work. This way, the child may still work hard even if they won’t attain an A or B. For instance, maybe you pay $20 for effort then another $20 for an A, $10 for a B, etc. This could also pull from a natural born student who doesn’t work hard but gets all A’s.

    We certainly want our children to work for results, but we really want to instill a work ethic.

  5. Anonymous

    I paid per letter grade. Paid more in high school, and more in college. Didn’t pay for anything below a B. And a big bonus ($50) for straight A’s. Also my parents did it also and paid my kids, more than me if I recall correctly.

  6. Anonymous

    I did and they did very well. Both graduated, one with high honors, both went to college and made the Dean’s list and graduated with honors. Both are hard working successful adults. I say yes, it’s an incentive, and my one child was a tad, lets say, would rather play video games, I saw this child work harder because of the money incentive. I knew he was capable of doing it, he just needed a ::push::

  7. Anonymous

    Great article. My parents used to give me a little money for my report cards when I was younger. It wasn’t much but a nice reward for being a good student. I don’t think I needed their motivation to get good grades as I was already doing that anyways. I do like how you brought some behavioral finance terms into the article.

  8. Anonymous

    I’ve never paid my kids to do well on a test or get good grades, that’s just expected. But, I can see how in some circumstances it’s a good idea but $20+ per test is ludicrous! I’d go broke at that rate. 🙂

  9. Anonymous

    Interestingly, there is some new research that says merit pay for teachers really would work better if paid in advance and then taken away (as suggested above).

    In any case, I’m with NicoleandMaggie on this. Research with benchmarking is basically any other area is pretty clear: if you create motivators or targets for one group of people and reward them, then your other people that aren’t rewarded with become resentful and decrease their performance. Similarly, if you set broad targets for everyone, then your high performance revert to the mean and eventually the motivator (money) has a declining marginal utility on your lower performers – meaning, you continually have to offer more to get them to hit the targets you set.

  10. Anonymous

    The research on this specifically says that it decreases intrinsic motivation in most kids. Paying kids who are poor readers to read seems to help, but paying kids who can already read decreases their desire to read.

  11. Anonymous

    Hi! Great post 🙂 When I was in high school my parents paid me for good grades. I was already doing well and my parents challenged me to get an overall A+ at the end of the term for every subject (except gym because I was/am unco).

    An A+ earned $20, an A earned $10 and an A- earned $5. My sister and I would forget all about the system until exam time but we usually fared pretty well. The money was usually spent during our holidays. We did some chores but never received pocket money for them. According to my mother money wasn’t motivation enough to do chores. Haha, oops.

    I think the system worked well but not for every assessment. We also received extra if we took out a prize for the top student in the subject for our grade which our school did every year. It took a lot of effort to pull that one off! It worked wonderfully even after I got my part time job. I agree with you about knowing what motivates each child. Definitely an ad hoc basis kind of system.

    — Louise
    Ps: sorry for the long post!

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