NBC News’ Natalie Morales got paid for good grades. Should your kids?

Betsy Wagner
Senior Producer

It might not surprise you that NBC News’ Natalie Morales was a straight-A student when she was a kid. But what do you think about the fact that her parents paid her cold, hard cash for those good grades?

“For every ‘A’, I got 20 bucks,” she told Jen Rogers during an interview for Yahoo Finance’s My Three Cents. “I was an ‘A’ student because I was motivated.”

For Morales, each class was an opportunity for a windfall: An ‘A’ in Physical Education was worth just as much as an ‘A’ in “core” academic classes such as Math or English.

“I think (it was) six or seven subjects depending on what grade I was in,” she recalled. “If I got straight A’s, it was like $140. I was like, ‘Okay!’”

Growing up, NBC News' Natalie Morales got paid for her good grades.

Morales’ parents certainly aren’t the only ones to use cash as an incentive for their school-aged children. According to a 2012 survey by Harris Interactive for the American Institute of CPAs, nearly half of parents with kids in school (48%) pay their children for good grades. The average rate for an A: $16.60.

With a new school year upon us, the question arises: Do cash rewards truly pay off for students?

The research is, as you might expect, mixed:

Money may mess with motivation

Many studies show that money or other “external rewards” may actually dampen motivation. In one small, but classic experiment by University of Rochester professor Edward Deci, college students were asked to play a puzzle game for 30 minutes. Half of the students were told they would be paid for each solution they came up with; the other half were offered no rewards. At the end of the 30 minutes, Deci left the room briefly, and that’s where things got truly interesting: The students who were being paid tended to stop working on the puzzle when the researcher left the room, but the unpaid students were much more likely to keep going.

In other words, the money somehow demotivated the paid participants -- or, as Deci said, “No pay, no play.”

But it may help if done right

Still, some researchers insist that paying students can help boost achievement, if done right. Consider one study that stands out for its ambition, scale and results: From 2007 to 2011, Harvard economist Roland Fryer and his team conducted a wide range of experiments in more than 250 schools across five U.S. cities, exploring whether financial rewards would help students perform better academically. Here’s what they found: Achievement rose when students were paid for certain tasks such as reading books or doing their homework (what researchers called “inputs”). But performance did not budge significantly when students were paid for grades or test scores (“outputs”).

The implication: It may be more effective to reward the steps needed for being a high-performing student, rather than simply rewarding good grades.

Know your child

Of course, every family is different, as is every child. So experts encourage parents to think long and hard about how — or if — their own child might respond to financial incentives.

As for Morales, she has mixed feelings about paying kids to excel in school: “I think you want your kids to be motivated, because they want to get the good grades. But I will say it did help and it also was great for my back-to-school shopping.”

My Three Cents with Jen Rogers is a weekly interview series that explores celebrities’ history with — and relationship to — money and career. Find it exclusively on Yahoo Finance.

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