General Education

What Price for an A? Do Financial Incentives Lead to Higher Educational Achievement?

What Price for an A? Do Financial Incentives Lead to Higher Educational Achievement?
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Sarah Rivera April 24, 2015

As a parent, have you ever wondered if you should begin paying your child to get better grades? Learn what some educators and experts believe about the efficacy of this practice.

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Ten dollars is the going rate for an A in a friend’s household of two elementary school students. B’s are neutral, and C’s will cost their second- and fourth-grader 10 dollars each.

“Our thought is that a B is the minimal expectation, thus not worth anything. If they work harder and go above and beyond, they get paid. If it’s a C, they have not done their job, and it will take away from any A’s they have," said their mother, Lauren, who is also a second grade teacher. In her classroom, she has a treasure chest that holds rewards for positive actions, such as listening and good behavior.

Why Adults Pay

Earning good grades is a real form of earning for students. Parents and some teachers are paying for good grades and positive learning behavior as a way of motivating kids to do their best, and as a means of reaching students who don’t seem to care about school. Sometimes, paying for grades has a lasting impact, while at other times, it provides a short boost.

Nearly half of U.S. households with students give money for good grades, according to a 2012 survey by the American Institute of Certified Public Accountants. Good grades aren’t cheap, either. The average cost of an A runs parents $16.60.

Money manager Lynette Khalfani-Cox calls paying for grades an “academic allowance," saying that it reinforces a family’s financial values and shows that a family considers education important. It also makes her life easier and is just one more motivator to keep her two children engaged and striving for good grades.

Case Studies

In some New York City high schools, kids can earn CORE cash (CORE is an acronym for Community, Organization, Rigor, and Evidence) from teachers for showing positive learning habits. CORE cash enables students to buy school supplies, movie tickets, or passes that free them from the school’s dress code for a specific period of time. Middle school kids who show strong academic habits, like good behavior and persistence, earn points for special trips.

“In our school, we probably use rewards more explicitly for behaviors and reinforcing positive habits than actual achievement," said one NYC principal who leads a school for girls in grades 6-12. So, how well does this work? Students of hers are headed to Princeton, Barnard, Smith, Wellesley, and Bryn Mawr next year, and she would argue that this type of incentive system helped them to develop the skills needed to excel from middle to high school and beyond.

Other teachers also agreed that a carefully-crafted incentive can make a difference for some students.

“I strongly prefer that the kids be motivated by their interest in the material, and most students are, but if I have a student who really needs an external motivator and responds well to it, I’ll use it," said Karie, a music teacher.

She recently had a student who wasn’t even trying to participate in class, so she filled a box with some small, inexpensive toys and trinkets, and offered the student a choice in the box for each time he participated fully in class. “After a few weeks of this, he began to see that he really is capable of doing everything I’m asking the other kids to do in class. He started to take part much more enthusiastically in the music activities and classroom discussions."

What the Experts Say

But are kids going through the motions, learning to please parents and teachers, rather than shouldering their own workloads?

“It’s a sticky wicket," says parent coach Sarah Hamaker. “Kids will reach a saturation point. The small bag of M&Ms to clean their room just isn’t enough anymore." Kids have to be their own motivators and take responsibility for their studies, said the mother of four. By paying for grades, she’s argued, parents “are not really accomplishing what [they] want to accomplish, which is to motivate [their] child to do the best that they can in school."

At least one study supports this observation. Under the direction of economist Roland Fryer, a Harvard University program awarded some $6.3 million in academic incentives to nearly 40,000 students at 261 underperforming inner-city schools to learn if direct financial rewards could make a difference in student achievement. Paying students sometimes resulted in improvements in behaviors that enabled them to earn better grades. For instance, financial incentives led students to read more books that, in turn, resulted in higher reading comprehension scores. But simply paying for higher test scores had no measurable effect, and students did not maintain the level of academic improvement once the incentive program ended.

Sometimes, too much parenting and too much homework involvement (science fair, anyone?) is at cross-purposes with what parents would ultimately like to see, which is independent academic achievement from their children. Hamaker advises parents to step back and provide children with a setting for doing well in school, such as a good place to study (not the kitchen table, she cautions) and time to do their homework. She has sent her children to school with undone homework because they didn’t budget their time correctly. And getting zeroes for incomplete homework taught her kids a valuable lesson.

“The earlier that they learn how it works in the world, the better. They take full and complete responsibility for their academic failure and success," said Hamaker.

Your Own Family

In terms of paying for grades, there is no perfect formula for all children. If you have a child who is money-oriented and likes challenges from parents, it might be just the thing. That’s what Thomas S. Friedland, economist and father of three, has found.

“It has to fit into the context of your parenting," said Friedland. “It starts out with you saying something about what’s important to you. You are telling your child that you want them to respond to your priorities, and that could backfire."

Friedland said there is no single and absolute formula for motivating students (“It’s a big world out there, and lots of kids have different experiences"), but he does think it makes more sense for rewards to come from teachers. While he never used money to motivate his own kids, he could see that it might work:

“To say it will work to a lot of people doesn’t mean it will work for every family. Every parent has to look at it and say whether it would be good for their family."

Further Reading on Noodle


Allan, Bradley M., and Fryer, Roland G., Jr. The Power and Pitfalls of Education Incentives. The Hamilton Project, The Brookings Institute, September 2011. Retrieved from Harvard.

American Institute of CPAs, Harris Poll. AICPA Survey Reveals What Parents Pay Kids for Allowance, Grades. August 22, 2012. Retrieved from American Institutes of CPAs.

Friedland, Thomas S. Phone interview April 13, 2015.

Hamaker, Sarah. Phone interview April 13, 2015.

Khalfani-Cox, Lynnette. Here’s Why I Pay My Kids For Good Grades (And Maybe You Should Too). The Money Coach, April 18, 2014. Retrieved from Ask the Money Coach.


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