We know from the old Beatles song that money can’t buy us love, but might it buy better attendance and grades in school? According to some school officials in cities such as Washington, D.C.; Chicago; and New York, paying students for higher performance motivates them to increase their effort and stay in school.

Not everyone agrees. In an opinion piece in the July 2, 2007 New York Times, Dorwin P. Cartwright Professor of Social Action and Social Theory Barry Schwartz wrote: “The assumption that underlines the project is simple: People respond to incentives. If you want people to do something, you have to make it worth their while. This assumption drives virtually all of economic theory.”

However, Schwartz believes that although students may perform academically at higher levels in return for cash incentives at first, it will be counterproductive to success in school in the long run—when the money runs out, for example. And instead of acting as a second motivation alongside those of curiosity, mastery of a subject, or love of accumulating knowledge, he says, the cash incentive is likely to compete with and diminish the appeal of the inherent rewards of learning for its own sake.

“What I find so troubling about cash incentives in education is that the only question being asked is ‘Do they work?’” Schwartz says in an interview. “If the answer is ‘Yes,’ then the question is ‘Can we afford it?’ This approach simply ignores the possibility that cash incentives could make things worse by changing both why students do their work and how they do their work. Thirty-five years of research in psychology makes it clear that this is not an idle concern. If by ‘work’ we mean improve performance on big tests, then, sure, incentives might work. If, however, we mean ‘become an enthusiastic learner for life,’ then there is good reason to think they will be counterproductive.”

Associate Professor of Economics Thomas Dee ’90 has been examining a quite different approach: Instead of offering cash rewards to keep children in school, what happens when you reduce welfare payments to the families of children who do not attend?

Dee recently completed a research paper based on a random-assignment evaluation among welfare recipients in 10 Wisconsin counties during the Learnfare experiment, an initiative created and implemented statewide in the 1980s. The experiment included a reduction in welfare funding of families whose children were habitually absent from school. Evaluations of the experiment at the time concluded that it had not been successful, showing little evidence that school attendance had improved. However, Dee recently uncovered flawed data that had skewed the results of the study. Stressing the importance of implementation quality, he says: “Learnfare did not have its intended effects in Milwaukee County, where poor data systems limited the accuracy of the school attendance data, but it did have its intended effects in the other nine counties. Following Wisconsin’s example, most states subsequently adopted Learnfare policies.”

Twenty years after Learnfare, Dee sees aspects of the program that might be of use to current experimental programs using cash rewards to boost school attendance. In keeping with current psychological thought on cash incentives, Dee believes that such a program’s value lies in compensating for behavior rather than test scores; tapping into the human instinct to avoid loss rather than seek gain by imposing sanctions; and involving the student’s whole family rather than merely the individual.

Schwartz concurs: “In the case of Learnfare,” he says, “they are targeting attendance, not school performance, and the incentives operate on the parents. Though of course, the parents can pressure the kids, it seems to be that this indirect approach can only help prevent the negative effects I worry about.”