In September, students in the Washington D.C. area headed back to school with an extra something to look forward to: through the 2008-2009 school year they will be participating in Capital Gains, a program that will pay them to achieve good grades.

Dr. Roland Fryer, the mind behind Capital Gains, is an economics professor at Harvard University who began a case study to find out how money could work as a motivator for students. If students were offered money for achieving higher grades in school, would they put in more effort? Since being paid periodically is instant gratification (as opposed to finishing school for a higher paying job), would students with financial concerns be more motivated to stay in school? With these questions in mind, and after standardized test results were examined, Capital Gains was created and instituted into a portion of schools in the D.C. area .

The program operates on a point system. Students earn points based on certain categories that include behavior, attendance, and achievement. Each point is worth two dollars, and every two weeks the points a student has earned are tallied up, and it’s pay day. Each student is allowed to earn a maximum of $1,500 per year.

D.C. students have earned a total of $265,986 to date, and there are encouraging increases in both attendance and passing grades.

Fryer’s study is not the only one of its kind. Since September of 2007, New York City has offered about 9,000 fourth and seventh-grade students up to $500 to improve their scores on the city’s English and math tests. A recent “Learn & Earn” program in Atlanta pays 8th and 11th-graders $8 an hour to participate in after-school study ($2.15 above the federal minimum wage). Starting this year, an Exxon/Mobil sponsored program will pay students in Arkansas, Alabama, Connecticut, Kentucky, Massachusetts, Virginia, and Washington $100 for each passing AP test score. Though the overall effects are yet to be determined, examination of a similar program in Dallas that lasted from 1995-1996 showed a 30% increase in high SAT and ACT scores and an 8% increase of students who attended college.

Supporters believe that paying students periodically will make the rewards of proper schooling more tangible, and will guide them down the right path. But others feel it provides an improper source of motivation that will be damaging to students’ work ethic. They argue that although the program may show positive results in the short term, self motivation for students will deteriorate in the long run, and that these payments are little more than bribes.

In spite of the surrounding controversy, the reward programs will continue. Capital Gain is currently scheduled to run only for the 2008-2009 school year, but if it proves successful the program may grow and expand to other areas in years to come. Until that day, students will continue to cash in–for now, and for the future.

Sources
http://www.usatoday.com/news/education/2008-01-27-grades_N.htm
http://articles.moneycentral.msn.com/CollegeAndFamily/RaiseKids
/IsItSmartToPayForGoodGrades.aspx