Incentives

Via Kathy G at the G Spot, I found this debate between Gary Becker and Richard Posner on the NYC experiments about providing cash incentives to parents and older teens to reward school attendance, parent-teacher conferences, and good grades.  This is part of Bloomberg’s broader anti-poverty strategy, something that I had been meaning to discuss for a while, so I’ll jump on in.

Becker has what is probably the classic economist’s take:  "boys and girls as well as adults respond to incentives."  While recognizing that there may be challenges with targeting the program correctly, he thinks that it’s worth trying the experiment to see if it work.  I basically agree with this — I think it’s funny that people get horrified about "bribing" kids to do well in school, but aren’t upset when workers get bonuses for good performance.

Posner comes up with a number of nitpicks of the program, but his fundamental concern is that poor attendance is a symptom, not the disease: "Paying children to attend school will reduce truancy rates some but
without improving school quality, and perhaps without improving the
education of the children receiving the payments."  (He thinks that school vouchers are the solution, but that’s another story.)

Interestingly, this has a lot in common with Margy Waller at Inclusionist’s concern that the Bloomberg anti-poverty initiative assigns the blame for poverty to poor people’s bad choices.  If the schools are fundamentally falling down at their job of educating kids, giving the kids money for passing tests is like giving me money to make a jump shot.  Similarly, low-wage workers have high job turnover in large part because that’s how the jobs are designed.  But, that said, MDRC has been studying programs designed to improve job retention and advancement.  And so far, one of the most effective programs has been one in Texas, which provided financial incentives to former welfare recipients who were employed full-time.

I agree that I worry about the framing of these payments as all about overcoming poor people’s bad values.  You can also tell a convincing story about how the financial incentives make it possible for a worker who is paid by the hour to take off from work to go to a parent teacher conference, or wait in a crowded medical clinic to get the kid immunized, or let the parent keep their job by hiring a more reliable babysitter, but that’s not how these payments are being covered in the media.

Kathy notes that behavioral economics also raises the issue that there are some times when cash incentives can have perverse effects. In Ariely’s language, a financial incentive can shift things from a social setting to a market setting.  So people were less likely to help someone load a car when offered an insultingly low wage than when asked to do it out of altruism, and were more likely to pick up their kids late from child care when the center instituted a late fee.  That’s one of the reasons I won’t tie my kids’ allowances to their picking up their rooms or helping out around the house — it would implicitly allow them to choose to forgo the allowance and not pitch in.  But I’m not convinced that this analogy applies to the incentives in the experiment.

14 Responses to “Incentives”

  1. dave.s. Says:

    “..concern that the Bloomberg anti-poverty initiative assigns the blame for poverty to poor people’s bad choices…”
    I better go read her post, but I am thinking of the great Mondale line “What are you going to believe? Him, or your own eyes?” and it seems to me that a great deal of poverty is apparently due to choices made by the poor. Preference for immediate gratification over deferred gratification, lack of diligence. How to build that sort of cultural capitol for folks who don’t now have it – and in specific, for kids whose parents don’t have it and may not even want it – seems to me an enormous challenge, and exactly on point for remedying problems.

  2. jen Says:

    Isn’t it true that food stamp recipients, even today, can lose benefits if their kids don’t go to school? How has that worked out? Has that improved quality of education in addition to attendance?
    I tend to agree with Elizabeth — school attendance is a requirement, not something you get bonused for. It’s the baseline. Plus, I just disagree with this idea that free-market economic approaches can work in any situation. Not everything should be monetized. Witness the *entire* health care industry.

  3. Amy P Says:

    If you and your parents and your cultural milieu don’t like school, don’t respect teachers, and don’t see any point to education, how on earth is that situation going to be turned around without adding extra carrots?
    (I just potty-trained a daughter just before she turned 4 with the help of material incentives. If it weren’t for all those little art prizes I had her earning, she’d probably still be in diapers two years later. It just wasn’t important to her. Diapers worked just fine, in her opinion.)

  4. Amy P Says:

    Oops. That first “just” shouldn’t be there.

  5. landismom Says:

    It is not unheard of, in my middle class circle, for parents to reward their children for good grades with a Nintendo, a new toy, a nice dinner out, some ice cream, and outright cash. I’m not really sure how paying children in families that can’t afford to ‘incentivize’ learning in that way is wrong.
    I can’t think of an immediate analysis for paying for attendance (unless it’s the paycheck that I get for showing up to work every week), but it does raise a question for me. If you have to pay someone to do something–then does that person learn to recognize the value of showing up for the thing that they are required to do? And isn’t that a good thing to have happen?

  6. Jackie Says:

    I agree with landismom’s point– families who can afford it have been rewarding kid for good grades for years now, and perhaps that is just one of the many educational advantages those kids have.
    Also, I’ve been thinking a lot lately about allowances, and whether to tie them to money, and it’s becoming more and more connected (in my own head, at least) to the idea of housework itself not being seen as “real” work, but as an obligation that we (mostly women) have to our families. Perhaps one way to disrupt that cycle might be to show our kids that we believe housework is real work, the way that outside-the-home work is, and should be rewarded as such.

  7. dave.s. Says:

    We’ve got the power supply for the Wii and the television locked up in a little cabinet. Homework done? It can get unlocked for a 1/2 hour. Letter to grandma written? Gets you some more. Worksheet on common denominators, written by dad? More! That’s incentive for you! And grades have improved. I feel no shame about this. The disinterested love of learning only gets you so far, with a 9-year-old.

  8. Amy P Says:

    dave s.,
    My dad was doing something very similar this spring with my nephew and supplementary math work. My nephew would do some math work and then get to watch a set amount of Star Wars. (Star Wars was what all the cool kids at school were basing their pretend play on.) My nephew’s class was transitioning to a fuzzy math curriculum mid-year, so my sister and dad took matters into their own hands. Nephew is headed off to German schools this fall.

  9. Amy P Says:

    I’m somewhat uncomfortable with the incentive programs for reading that we’re signing our daughter up for for the summer. I liked it a lot better when she was reading about sea creatures because she was crazy about them, rather than her polishing off 25 slender paperbacks in two days in order to win prizes. On the other hand, summer is three months long, so we need all the help we can get around here. When it’s fall again, I’m not going to give reading incentives. We’ll just get books from the library and that will be that.

  10. dave.s. Says:

    More! on the them of cultural capitol:
    They used to call us “husbands” and “fathers” back in the day. That’s what these kids had never seen.
    http://www.city-journal.org/2008/18_2_diarist.html

  11. Elizabeth Says:

    Jackie, I’ve been thinking about your idea that tying allowance to chores is a way of signaling that housework is “real” work. I don’t think the logic holds — because there’s no doubt that cleaning houses is “real” work if your job is a housecleaner. The cultural idea that we’re fighting isn’t that cleaning houses isn’t work, it’s that anything you don’t get paid for isn’t work.
    And, more specifically, unless I get to charge my kids for cleaning the house, doing their laundry and cooking their meals, what they learn from being paid to help (and having the option of not helping and not being paid), is that it’s mom and dad’s responsibility to pick up after them.

  12. Jackie Says:

    But how do your kids learn that lesson if you don’t have a housecleaner? Housecleaners are not part of my kids’ vocabulary, you know? Someday they will be, I’m sure, but I’m thinking about how to teach them important lessons in those intervening years.
    We’re having conversations with our kids now about chores vs. responsibilities vs. “jobs” you get paid for, but I think part of that conversation will involve bargains and contracts we make together as a family, just like the ones my husband and I made years ago about who would handle which chores around the house. Again, I don’t propose that my kids get paid for picking up their socks, but I still think that valuing housework is a good idea, and that the idea of giving kids money they did nothing to earn is an artifical scenario that doesn’t teach them lessons about work or money management.
    I’m open to discussion though, as always!

  13. jen Says:

    I seem to remember some friends whose family had this concept of “units”. Everybody contributed to the household in some way, and you only got overt rewards if you went above and beyond. Interestingly, in this family both paid work and not-paid-for-cash-work got “units” … this was basically a way of explaining why the dad never helped around the house. This was the 80s, if memory serves.
    Also someone on a parenting site somewhere talked about how their kids had basic chores, but then could earn extra money by pulling additional tasks out of a fishbowl.
    Each of these approaches tries to mix paid and unpaid work, to some extent. FWIW.

  14. Elizabeth Says:

    We are saying that D gets an allowance not tied to chores, both boys are expected to do some basic things (pick up their rooms, clear tables after dinner, help put their laundry away) not tied to allowance, and that extra work (gardening, folding everyone’s laundry) is available for money.
    We also subsidize lemonade stands. (Did I mention that the boys made more at our yard sale than we did?)

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