How Much is That ‘A’ Worth?

LouAnn Lofton

When I was in elementary school, I’d excitedly count down the days until I got my next report card, anxious to make sure I’d gotten an ‘A’ in each and every one.

But not because I was one of those naturally straight-A kids: I got paid.

Instead of giving me an allowance, my parents paid me for good grades: $5 for each ‘A’ and nothing for anything below that. So a report card with five ‘As’ and two ‘Bs’ gave me $25 instead of a potential $35—an outcome I worked hard to avoid.

My folks weren’t alone, it seems. An August 2012 Harris Interactive survey for the American Institute of CPAs found that 48% of parents pay their kids for good grades (though kids today get an average of $16.60 for an ‘A’!). Some argue a monetary incentive cheapens the act of learning. Some argue it just plain doesn’t work. Others counter that it sets the precedent early on for effort leading to reward.

Unfortunately, Harvard economist Roland Fryer, Jr.’s extensive experiment with paying schoolchildren in Washington, D.C., Chicago, Dallas, and New York doesn’t give a clear answer as to the idea’s merit (the death threats he received, though, shows just how touchy the subject can be).

While death threats go way too far, I understand and respect how the idea of paying kids can upset parents. For me, I loved “earning” my ‘A’ money, it didn’t warp my thinking about money, and I reinvested most of it anyway by using it to buy books.

Pay it forward. What kinds of financial incentives work for kids? LouAnn Lofton is the author of “Warren Buffett Invests Like a Girl“, and a contributor to the Motley Fool.