getting paid to study (incentives for exams)

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A father writes Tim Harford (author of the book Undercover Economist) to inquire on how to divvy up a stash of cash as incentives for his son to pass his exams. Harford answers:

Start by promising more than you can deliver. If you offer €10,000 for a perfect score, you will only need to apologise after your scheme has succeeded. That may seem to undermine your credibility, but the real risk lies the other way: your son may expect to get the money from his doting dad anyway. Discourage this view or your plan will be in vain.

You must also pitch the stakes just right. Research in behavioural economics suggests that trivial rewards are worse than no rewards, but also that performance suffers when too much is at stake.

Finally, focus on the early exams, because success breeds success. Promise your son €200 for every excellent result in these: that should engage his interest without throwing him into a panic. If things go well, the money will run out before the high-pressure exams. But by then he will have mastered his subjects anyway.

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Now, the question here is can we develop an insurance scheme that will fund the incentives (drawing from the insurance policy)? In the payment term, parents would be pressed to help their child (via tutoring). In the long run, (in the ideal case) the child will have enough study habits and have high enough grades to qualify for college scholarships.

On the other hand, the child may be put off by the hard work involved with studying which will increase the lure of those ‘get-rich-quick’ schemes when he gets older.

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