Paying Kids To Do Well On Tests Not Only Works, It Could Improve Their Adult Earnings

Adults get paid to do well, so why not apply the same principles to students?

On the surface, it seems like the worst kind of message about motivation to send to a student: If you do well on this test, we’ll pay you $100 bucks. But according to research, not only does this idea work in the short-term, motivating more inner-city students to take AP classes and do well on them, it also correlates with these students earning more college degrees and higher incomes over their lifetimes.

The working paper, from research conducted at Northwestern University and written up recently in the Harvard Business Review, looks at the Advanced Placement Incentive Program, which since 1996 has been giving kids in disadvantaged schools who earn at least a 3 on the AP test anywhere from $100 to $500 (it also provides cash bonuses to teachers). Tracking 290,000 kids, economist Kirabo Jackson compared students in Texas schools before and after the program was adopted, and also compared them to students in similar schools that never took up the APIP program.

Jackson found short-term benefits of the cash payments:

APIP adoption increased taking an AP course by 21 percent and passing an AP exam by 45 percent.

But he also found long-term benefits, particularly among Hispanic-Americans:

For those participating in APIP four years after it was adopted, the probability of students persisting in college as sophomores rose by about 20 percent and earnings increased by 3.7 percent. The pay increases erased the Hispanic-white earnings gap and reduced the black-white earnings gap by one third. The results imply a per-pupil lifetime earnings benefit of $16,650 for a cost of $450.

A growing number of schools, from Alabama to Chicago and New York, are implementing cash payment schemes.

The concept is still controversial, and its success depends on how well it’s implemented. But paying kids to do well may offer a real-life lesson in motivation. After all, it’s kind of how real-life incentives as an adult function. While there are plenty of other motivations, such as passion, prestige, and impact, to get the job done well, in the end, we all want to get paid.

[Image: Test via Shutterstock]

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  • Nicole Sanderson

    I wonder if the results also are related to the kids feeling a sense of worth from getting paid for their performance. Test performance is similar to the responsibilities of some jobs -- and if these same kids were actually given a job in a store, for example, with a similar opportunity to earn based on their effort -- I suspect that would have a similar result of helping them tap into their own motivation, harness their focus, concentration, and personal resources to follow through... kids, especially minorities, sometimes don't get hired at decent-earning positions until much later in life!