Economics, perhaps more than any other discipline, is about studying how people respond to incentives. Incentives are characterized as either extrinsic (financial rewards for good grades) or intrinsic (pride in a job well-done).
In economic literature, there’s substantial research on the relationship between intrinsic and extrinsic motivations and how it affects behavior. Psychologists have also spent a great deal of time and effort studying this topic. The bottom line is that extrinsic motivations tend to crowd-out or dominate intrinsic motivations.
In a context where students are provided financial rewards for earning good grades, this implies students are more likely to abandon a curious pursuit or interesting challenge in favor of an “easy A.” In addition to distorting the incentives of faculty and the university, this stifles actual learning and personal development.
Financial rewards are often a useful device for aligning incentives of different decision-makers and agents, but it’s clear that whenever incentives are artificially manipulated—especially extrinsic ones—unintended consequences are apt to follow.
While I understand and even empathize with the sentiment behind the typical arguments for paying students for good grades, it’s almost certainly counterproductive.
Michael S. Visser is a professor in the department of economics at Sonoma State University.