Misguided Incentives in Schools

A few years ago Uri Gneezy and Aldo Rustichini ran an insightful study to test the effectiveness of incentives. They approached an Israeli daycare center that was suffering from a not too unusual problem: late parents. To counter their tardiness, Gneezy and Rustichini imposed a fine – every time the parents were more than ten minutes late, they had to pay up. Before I finished reading about this study my intuition told me that the fine would be an effective deterrent. I was wrong. Not only did it not work, the fine actually caused an increase in late parents compared to control groups. The graph below says it all.

So what happened? Before they imposed the fine, the mothers were bound by a social contract, where social norms about being late influenced parents to show up on time and avoid the guilt that comes with being late. However, when Gneezy and Rustichini imposed the fine, parents became bound by a market contract; they suddenly started paying for their tardiness with money instead of guilt. Once this happened, the parents could decide for themselves if they wanted to be late or not.

The worst part, at least for the day care center (they actually ran this experiment on several centers), was that when they removed the fine the parents continued to act according to the market contract. And, as Dan Ariely explains,”social relationships are not easy to reestablish. Once the bloom is off the rose — once a social norm is trumped by a market norm — it will rarely return.”

Misguided incentives with unintentional negative consequences are nothing new (not to this blog or academia). For example, in a study done back in the 1970s, researchers put in place a reward program at an elementary school to increase students’ interest in math; for every three hours the students’ did math they earned credits they could use to get prizes. In one aspect this worked – kids spent more time on math. But after the teachers removed the prizes (they told the students’ they had to be fair to the rest of the students in the school), the students’ interest in math “plummeted to a level below where it had been during the pre-reward baseline period. In other words, it didn’t just go back to where it had been before the reward program was instituted, as an economist might have predicted – the kids were now less interested in the games than they were when the program started.” Clearly, in this aspect, it did not work. The fundamental problem with incentives like this one is that they undermine the very interest, motivation and passion that they try to garner.

This is why I am concerned when I hear about schools incentivizing their students with money. Here are three cases, which I pulled from an US Today article:

• In suburban Atlanta, a pair of schools last week kicked off a program that will pay 8th- and 11th-grade students $8 an hour for a 15-week “Learn & Earn” after-school study program (the federal minimum wage is currently $5.85).
• Baltimore schools chief Andres Alonso last week promised to spend more than $935,000 to give high school students as much as $110 each to improve their scores on state graduation exams.
• In New York City, about 9,000 fourth- and seventh-graders in 60 schools are eligible to win as much as $500 for improving their scores on the city’s English and math tests, given throughout the school year.

It’s a bit too early to tell if such programs are working (if anyone has data or a news story on the subject please let me know). On the other side of the coin, there is plenty of talk about “merit pay”, programs that reward teachers for high performance. In one form or another, they’ve been implemented in Denver, Chicago, Nashville and most notably in Washington D.C. by former D.C. chancellor Michelle Rhee. Have they worked? According to the Freakonomics Blog:

In the last year… research showing that merit pay, in a variety of shapes and sizes, fails to raise student performance. In the worst of cases, such as the scandal in Atlanta, it’s contributed to flat-out cheating on the part of teachers and administrators.

Personally, I believe that education reform needs to be a top-down effort; working from the bottom-up with incentive plans like these can only do so much. But I’m really not that concerned about education reform. What keeps me up is how humans misunderstand incentives. We think that bonuses are a good idea in business, we think that cash rewards are good in schools, and we ignore the fact that many people don’t need an incentive because they truly enjoy what they do. Sometimes incentives in businesses and schools work, but sometimes they don’t. What’s important is that we keep theory and reality in line. To do this we must run experiments, collect data and empirically demonstrate what the best course is – be good scientists in other words. Psychologists have been doing this for years, now it is time for those outside of academia to do the same.