Sunday, January 13, 2008

Sunday dollars+sense: in praise of bribery

Desperate for your child to do well at school this year? From the world of economics comes an idea so crude, so anti-educational that the very thought of it probably revolts you.

But it can work.

A few years back my 16-year-old daughter needed help with her Maths.

She went to a tutor and within months had jumped from getting below 40 per cent in her tests to more than 90 per cent.

And she was getting to see her favourite bands.

Her tutor had bribed her... by promising to buy her a ticket to a concert each time her marks topped 90 per cent.

In New York mayor Mike Bloomberg is trying the same thing.

Since September students in more than 60 of his schools have been receiving performance pay for their Maths and English exams.

Turning up gets a Year 4 student $5. Doing well earns more up to a maximum of $25.

Year 7 students get double. $10 for turning up, up to $50 for a perfect score.

The ideas are being tested by a crusading young black American economist Roland Fryer who also developed a program in Dallas entitled “Earning by Learning.” It paid students $2 for each book that they read, up to a maximum of 20 books per semester.

The remarkable early results show that the students read an average of 23 books each, suggesting that after they caught the habit they continued reading for its own sake.

It's happening world-wide. In Britain the health service is handing out iPods to drug addicts who stay clean. In Mexico the government is paying pesos to poor families who send their children to school. The enrolment of girls in high school has soared.

The payments don't have to be big. A British experiment that paid pregnant women to stop smoking until birth found that 40 per cent gave up compared to 9 per cent who weren't paid. One of the researchers, Stephen Higgins told New Scientist the behaviour was crazy. “Why would a pregnant woman smoke, knowing it will affect the foetus, but stop because I offer her a couple of bucks?”

It's probably because people who smoke or don't study place a lot of value on immediate rewards and not much on future ones. Economists would say they discount the future, or “have a high discount rate”. Like my daughter they are particularly susceptible to bribes.

Jim Giles, Cash incentives: Worth every penny, New Scientist, November 22, 2007

Stephen J. Dubner,
Toward a Unified Theory of Black America, New York Times Magazine, March 20, 2005.

Update: "They pay me there".