83. What's Wrong With Cash for Grades?

[0] From APM, American Public Media and WNYC, this is Freakonomics Radio on Marketplace.

[1] Here's the host of Marketplace, Kai Rizdahl.

[2] It's that moment every couple of weeks.

[3] We talk to usually Stephen Dubner about the hidden side of everything.

[4] This week, though, the hidden brains behind the operation.

[5] Steve Levitt, economist at the University of Chicago.

[6] Steve, how are you?

[7] I'm doing great.

[8] Yeah, well, here's the thing.

[9] What'd you do with Dubner, man?

[10] You know, I love golf.

[11] I somehow managed to convince Dubner.

[12] He loves golf, too.

[13] So now we've got to flip a coin each week to see who gets to play golf and who asked to ask him.

[14] That's so funny, kids.

[15] You know what?

[16] I cannot see Dubner playing golf to save his life.

[17] But I guess that's a whole other interview.

[18] So what do we got?

[19] We're talking about, what, schools today?

[20] We are about incentives about bribing kids to do better in school.

[21] Oh, good.

[22] All right, all your parents out there get ready to write in.

[23] So what do we know about bribing kids?

[24] Does it work?

[25] I mean, one great thing about kids is that they're relatively cheap to bribe.

[26] 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.

[27] No, get out of here.

[28] Fifty bucks?

[29] I think tons of parents do that.

[30] I certainly do with my kids.

[31] So you dangle 20 bucks in front of them and say, this is yours if you're getting at A?

[32] I mean, how does it work?

[33] 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.

[34] So that study that, though I've just done with some colleagues, comes to kids.

[35] 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.

[36] Okay.

[37] And so we did this on over 6 ,000 kids using financial rewards and using non -financial rewards like trophies.

[38] We varied whether we paid the kids.

[39] Everybody gets a trophy nowadays.

[40] Didn't you know that?

[41] Well, not in our study.

[42] You should have seen the looks on the kids' faces because one of the things we also do is we give them the trophy.

[43] We let them hold the trophy to sniff the trophy, to really enjoy the trophy.

[44] We sit the trophy right on their desk in front of them and say, take the test.

[45] And if they don't do well, we snatch it away from them.

[46] Oh, no, you do not.

[47] We absolutely do.

[48] Economists are a heartless sons of guns, man. It hurts more to lose something that's yours than it is benefit to gain something.

[49] 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?

[50] With the young kids, the trophies work great.

[51] The money works.

[52] great.

[53] It's harder to convince the older kids.

[54] They're only the money works.

[55] And the money really works all the time, works best when you put it in front of them.

[56] You let them see it, and then you snatch it back from them when they don't do well.

[57] 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 if they do well, right?

[58] Do you lose the gains?

[59] 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.

[60] It wasn't like I stopped doing it.

[61] The counter argument is that you build up a good study habits, hard work, and then those persist over time.

[62] But come on, you're a PhD economist at the University of Chicago for crying out of that, right?

[63] You're not...

[64] Well, I am now, but boy, used to see me in college.

[65] All I did in college was drink and play whiffleball.

[66] It was a miracle I even made it through.

[67] What do we know about boys versus girls, right?

[68] I mean, is there a, is there a gender difference in how this thing works?

[69] 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.

[70] Boys can be bribed.

[71] It's exactly right.

[72] 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.

[73] And when you incentivize them, they can't try that much harder.

[74] But boys basically completely slack off unless the stakes are really high.

[75] 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.

[76] bucks.

[77] Honestly, it is one of the best investments you can make if it really causes your children to change your behavior.

[78] I'll give you an example.

[79] So I have a son who doesn't care at all about school.

[80] He's only a third grader, but he had a computer -assisted math program.

[81] He spent about a total of an hour and 15 minutes on it over the first month that he had it.

[82] He asked me for 50 bucks so we could get a new toy.

[83] 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.

[84] $50 toy.

[85] He ended up spending about 40 hours over the next week doing math.

[86] I mean, he spent more time in that one week on math than he probably spent on his entire life.

[87] And we both couldn't have been happier.

[88] I mean, the beauty is if you take it by hour, it costs me about a dollar an hour to get my kid to study math.

[89] I mean, there's the economist in you coming out, right?

[90] Come on.

[91] Yeah, it's a great deal.

[92] I mean, compared to trying to, you know, get someone to cut my lawn or to cut my hair.

[93] It was a bargain.

[94] It was a great bargain.

[95] Stephen Levitt at the University of Chicago.

[96] Dumner's back in a couple of weeks.

[97] Freakonomics .com is their website.

[98] Steve, thanks a lot.

[99] Oh, thank you, Kai.

[100] Hey, podcast listeners.

[101] It's me, Stephen Dubner.

[102] Coming up on the next Freakonomics radio, the legacy of a jerk.

[103] She'll be remembered as an astute businesswoman, a rabbit historian, a fascinating hostess, and a boundless creative.

[104] She loved her family.

[105] history, antiques, horses, the arts, and good gossip.

[106] She was a difficult mother and a horrendous mother -in -law.

[107] She will still be missed.

[108] Well, here are some stories about Steve Jobs, too, but maybe not the stories you're thinking.

[109] That's on next week's Free Economics Radio podcast, The Legacy of a Jerk.