The Unintended Consequences of Incentive Programs in Schools

For months now—since learning about a project that was rewarding students who earned good grades with cold hard cash and limo rides—I’ve been mentally wrestling with the kinds of external incentive programs that are becoming more and more popular in our schools.

And while I’ve never been a real supporter of incentivizing any kind of learning, I’ve never had enough tangible evidence and/or research to take an intelligent stand for or against formal incentive programs until today.

You see, I just finished poking through a report titled A Fine is a Price—spotlighted in Clay Shirky’s newest book, Cognitive Surplus—that I believe carries real consequences for schools that are thinking about implementing external incentive programs.

Interested in understanding more about how external consequences and rewards influence human behaviors, Uri Gneezy and Aldo Rustichini decided to study 10 day care centers in the Israeli city of Haifa.

Specifically, they tracked the number of times that parents picked their children up late each week.  What they discovered when they first arrived in Haifa was that the number of late pickups was relatively low—7 or 8 per center—even though there were no tangible consequences (read: fines) for tardy parents.

Then, Gneezy and Rustichini had 6 of the centers institute a fine to be automatically applied to the bills of parents who were more than 10 minutes late.  The remaining 4 centers continuted to operate with no tangible consequence at all for late arriving parents.

What they discovered after three months of tracking patterns of parent pickups surprised me. 

In the centers that began automatically fining parents, the number of late pickups nearly tripled—rising from 7-8 per week to nearly 20 per week—while the number of late pickups in the centers with no consequences for late arrivals remained unchanged.

Worse yet, even after fines were discontinued, the new patterns of late pickups remained the same.  Centers where parents were charged every time that they were late continued to see nearly 20 late pickups every week while the number of late pickups in centers that had never introduced a fine hovered between 7 and 8.

Crazy, isn’t it?

Why would fines designed to discourage parents from picking their children up late have the exact opposite effect—even months after the fine policy was revoked?  And what does this mean for schools considering incentive-based rewards programs?

Here are some lessons that I think apply:

Human relationships are best governed by social norms.

The first lesson to be learned from Gneezy and Rustichini’s study is that human relationships—including those between teachers and students—are best governed by social norms. 

Think about the parents in the Haifa day care centers that had no fines for late pickups.  Why did they ever bother to arrive on time to get their children?  We all lead busy lives.  We get caught up at work, we have errands to run, we have piles of email to answer and we have piles of bills to pay.

With no incentive to be on time, you’d think that more parents would show up late to get their kids, right?

The point is that there was an incredibly powerful incentive to arrive on time.  Parents in any day care center develop social relationships with the adults that care for their children.

They know that if they are late, they interrupt the equally busy lives of the day care center professionals that they come to know and appreciate.  Socially, it’s just plain unacceptable—even offensive—to let down the people that you care about, right?

Those social motivations are what kept parents in centers with no fines arriving on time.

Don’t the same kinds of motivations drive the students in our classrooms?  Aren’t there kids every single year that you can reach simply because they don’t want to let you down?

Sure there are. 

The most effective teachers rely on relationships as levers to encourage certain behaviors all the time, and for most of our students—like most of the parents involved in Rustichini’s study—keeping teachers and parents happy is a motivator that really matters.

Introducing market-based incentives erases the power of social norms and human relationships.

The second lesson to be learned from Gneezy and Rustichini’s study is that once you introduce market based incentives—fines for arriving late to pick up your child from day care, cash for earning good grades in school, prizes for reading a certain number of books every year—the power that social norms have in human relationships are erased.

In Haifa, parents in centers that instituted fines went from seeing their children’s care providers as people that they cared about and respected to just another cog in a market driven world. 

Arriving on time went from a decision based on social norms—I’ve got to get there because Mary is waiting to get home to her own children and being late isn’t fair to her—to a decision based on market norms—I’ve got a ton to do today, so I’m going to take the Center’s fine and get caught up here at the office.

As Shirky explains, “The fine turned day care from a shared enterprise into a simple fee-for-service transaction, allowing the parents to regard the workers’ time as a commodity, and a cheap one at that” (Kindle Location 1708-1712).

For teachers and schools, the implications of this shift are super significant.

We literally depend on social norms in order to manage our schools and our classrooms.  Motivating students to do anything—finishing assignments, tackling tough new concepts, behaving, treating peers with respect—is almost always dependent on the strength of the relationships that we develop with our kids.

In schools that rely on incentive programs, however, those relationships become meaningless. 

Students, too, move from decisions based on social norms—I’m going to get all of my missing work turned in because Mr. Ferriter believes in me and I don’t want to let him down—to decisions based on market norms—I don’t really care about the prizes that I can win by getting all my work turned in, so I’m not going to do it.

Frightening, huh?

Basically, if you’re planning on implementing any kinds of incentive programs in your building, you’re taking away the influence that your teachers once had over your students.

That  means you’d better have a never-ending pile of really good prizes if you’re hoping to see meaningful changes in student behaviors.

Introducing market-based incentives fundamentally changes the nature of human relationships.

Perhaps the most important lesson to be learned from Gneezy and Rustichini’s study is that market-based incentives will fundamentally—and permanently—change the nature of human relationships in organizations once governed by social norms.

Remember that in Haifa, the number of late arriving parents in centers that experimented with fines never returned to normal.  Even months after the practice of fining late arriving parents had been rescinded, these centers still had nearly triple the number of tardy pickups as the centers that had never experimented with fines to begin with.

As Shirky explains, “The experiment showed that market transactions are not merely additive to other human motivations; they alter them by their mere presence” (Kindle Location 1717-21).

That means schools considering incentive programs had better be fully convinced that the programs they’re embracing are going to have long-lasting and significant impacts on student behaviors and academic performance before deciding to implement them because there is no turning back.

Once the social norms that have traditionally governed the work of teachers and students in the schoolhouse are replaced by market-based incentive programs they are gone forever. 

You can’t just try an incentive program, discover that it doesn’t have the desired results, and go back to business as usual. 

Never again will students invest effort because they care about what a teacher thinks.  Instead, they’ll begin making calculated decisions about behavior and/or performance based on the quality of the prize that you’re offering.

Is that a risk you’re willing to take? 

I’ve got to say that incentive programs frighten me because schools seem to adopt them without careful consideration of just how those programs are going to change the nature of relationships in the schoolhouse.

And while incentive programs might result in a few short-term wins—students initially responding to exciting new chances to be rewarded—short-term wins in education are rarely evidence of lasting, significant change. 

Don’t get me wrong:  I know that motivation is a huge factor in student success.  Motivation is a huge factor in any choices made by humans.

But based on Gneezy and Rustichini’s study, it sure seems that motivation programs based on market norms in inherently human and social organizations like schools are going to have long-lasting consequences that do more harm than they do good.


Works Cited

Shirky, C. (2010). Cognitive surplus: creativity and generosity in a connected age. New York, NY: Penguin Press HC.

10 thoughts on “The Unintended Consequences of Incentive Programs in Schools

  1. Bill Ferriter

    Alex asked:
    What if you’re in one of the many schools where teachers don’t have much influence over students in the first place?
    This is a solid question, Alex.
    I think my reply would be that any kind of external incentive programs need to be used on a case-by-case basis.
    There are certainly kids in my career who would have responded to external incentives far more than to me. In those situations, I’d be willing to give incentive programs a whirl.
    But those kids were always in the minority—especially when I worked to find motivating content that was appropriate for the age and skills of my students.
    My beef is that these programs are never used selectively. Schools either use them for every student at every grade level or they don’t.
    Which means that we’re always killing internal motivation in large handfuls of students.
    And I’d go as far as to say as the consequences of those decisions are far more severe in the high poverty schools that you mention. In buildings where internal motivation is low and relationships are weak, they need to be tended gently and cultivated—much like you tend a new fire while you’re trying to coax it to flame.
    External incentive programs across an entire building aren’t gentle tools by any means—-and they’ll erase ANY influence that teachers once had.
    I’m not sure that would make challenging schools any easier to work in.
    Does this make any sense?

  2. Alex Trenton

    Basically, if you’re planning on implementing any kinds of incentive programs in your building, you’re taking away the influence that your teachers once had over your students.
    What if you’re in one of the many schools where teachers don’t have much influence over students in the first place? Such as one of the schools with a 50%+ dropout rate. External incentives are better than nothing, aren’t they?

  3. Tess Ausman

    Another great post. I too have read Drive by Dan Pink and I also know about the cash and limo incentive. This is the “carrot” approach that Pink discusses – if you reward kids with money for getting good grades, eventually they will always expect money (that carrot) before they work for a good grade. I agree that my implementing incentives, schools are taking away rights that teachers have over students. When I was in the classroom many students would tell me that they were working hard because they enjoyed the class – and respected me. Thank you for this blog post!

  4. Bill Ferriter

    Hey Guys,
    Lots of good comments and ideas here. Thanks for taking the time to stop by!
    I like all the mentions that you’re making about Daniel Pink’s Drive. While I haven’t read it yet, Pink has written a ton lately about the fact that external motivators are not effective at driving change in knowledge-based organizations.
    Specifically, he’s come out against merit pay plans for teachers.
    What drives me completely bonkers is that despite being one of the most intelligent and respected thinkers in America right now, his position on merit pay in education seems to have gone completely ignored by the current administration and folks like Michelle Rhee, Bill Gates and Oprah.
    I don’t get it.
    As far as Mike’s idea that grades act like an incentive, I couldn’t agree more. I definitely think they have the same kinds of detrimental effects as any other kind of incentive—pizza parties, stickers, tickets—that schools choose to use.
    Heck, I saw it in action this week: Our quarter is ending, so I’m encouraging students to rework assignments that they haven’t yet demonstrated mastery on.
    Less than 10% have taken any action, though—including the kinds of thoughtful students that I figured would be all over the opportunity.
    When I asked one of my kids why he’d chosen not to rework anything, he told me that he’d done the math and figured out that reworking would result in a higher letter grade, so why bother.
    The hitch in my room isn’t that I’m hung up on grades. If I had my way, I’d give written narratives to kids on what they know and don’t know. I’d have student led conferences where kids told their parents what they’d mastered and where they were struggling.
    The hitch is convincing parents that grades aren’t worth keeping. That’s a shift that most communities will really struggle with. It takes the kinds of PR efforts and knowledge building that I don’t have the time for as an individual teacher.
    Any of this make sense?
    PS: Know where our current system of letter grading—-A, B, C, D—-came from?
    If not, go and look it up. It’ll curl your toes.

  5. David B. Cohen

    In addition to this study, Daniel Pink cites some other relevant studies in Drive. In a blood center, paying a small amount for donations also decreased the number of volunteers. Same conclusion – people are willing to do the right thing for the right reason, while adding money turns it into a transaction with a colder, impersonal cost/benefit analysis. In another study conducted in a laboratory, adults were asked to work on a problem solving challenge. Those who were volunteers or paid less would continue working on the challenge during “break” time, while those getting paid more would disengage from the task. The overall education conclusion should not be that teachers should volunteer instead of earning pay – not at all. These studies don’t suggest that such huge considerations about personal and family livelihood work the same way. Rather, if you already have the teachers hired and paid, you can motivate them do great work through autonomy,mastery, and purpose. A minor monetary boost will be less effective at the outcomes we really (should) care about.

  6. Anna T. Baumgartner

    Thank you!! I also have been looking out for hard data to support my gut feeling on monetary awards/fines. It is just so tempting because we teachers love to “make kids happy” and rewards are so much fun to give out. Maybe the following experience will also provide additional reasons to stay away from them, because as you point out, it’s difficult or impossible to undo the effects of incentive systems.
    Last year, one of the math teachers on our team founds some tiny dollar bill stickers and he really wanted to give them out as rewards for achieving learning objectives in math class. I had to admit they were some of the cutest stickers I’ve seen. 🙂
    But during our team meeting, two other factors besides the ones you mentioned helped us stick to our decision to not give out any physical rewards:
    1. When kids don’t get the monetary or other physical reward from the teacher, they can ask their parents to buy it or something similar for them after school.
    2. When students are rewarded for their performance, they expect more of the same kind of rewards the next time, but somehow it is never enough…a kind of addiction.
    For an alternative to incentive programs, step-by-step goal setting for personal improvement where students chose their own goals and evaluated themselves periodically throughout each semester worked wonderfully for us. Teachers also guided students by pointing out evidence of their progress towards their personal goals from time to time. Their goals and self-reported progress were included on their report cards and sent home to parents. We saw some low-achieving students really turn around, and soon our students were visibly the happiest in the school as well, due to this and other positive changes made by the team.
    After reading your post, it seems like the reason this had such a profound effect is that it humanized the relationship between student and teacher.
    I also look forward to any comment you have on Mike’s question about grading…I’m now mentoring a teacher in a school where every assignment is graded from the first week of Gr. 1 on up.

  7. Mike Kaechele

    Great post Bill! I am definitely sharing this with my administration. My question is how does grading relate to this topic? I try to de-emphasize grades in my classroom but they seem to work as incentives that some students care about and others ignore. I see many parallels to this topic.

  8. Twilliamson15

    Agree that indiscriminate implementation of these programs (and most any others) is detrimental. I also think the long-term impact of such programs calls them into question. However, what about districts which use AR (specifically) as a diagnostic tool? In our school, at least, there are no “rewards” for reading a certain number of books per year. AR is used as a method of calculating a student’s target reading level. Students then have a range of reading levels to select from and test on. Our Language Arts teacher requires that our students read two books within their AR range per 9 weeks, and are then free to choose other books outside of their reading level. We have to recognize that there are appropriate and inappropriate uses of every marketed classroom tool. Thanks for sharing your thoughts on Cognitive Surplus as well, I started it, but got sidetracked by several other books, including something about Teaching the iGeneration 🙂

  9. Karen janowski

    Yes, This study was also highlighted in Drive.
    Since there are so many incentive program happening in our schools, it is surprising that more studies aren’t done in this area. My concern has always been, if we need to build in a reward, what message are we sending our students? Could it be we are communicating, this task is so awful, we have to give you a reason or incentive to do it?
    No matter what our educational decisions, it is vital we consider the unintended consequences. There are often unanticipated ones.

  10. LeeAnn

    Thanks, Bill for the excellent summary of the study and an even better explanation of what it means for schools. Every teacher, principal, parent, and school board member needs to read your post. Didn’t Daniel Pink also reference this study in his book Drive?

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