Although paying students for good grades may be a good incentive in the short term, it robs the student of the excitement of learning just for learning's sake. According to the National Education Association, paying students also creates conflict in the classroom and adds pressure for teachers to inflate grades.
A study done by Stanford University divided preschool children and gave stars to one group for drawing but gave no stars to the other. When the children were asked to draw again without reward, the group that previously had received gold stars put very little effort into the drawings.
A Harvard study found that paying children for good grades alone had marginal results. Researchers concluded that money doesn't increase a child's skill but may increase his work ethic temporarily. Any reward system needs to be geared to each child's talents to be effective.
What used to be a tactic in some homes has been adopted recently by businesses as of 2014. Parents may still give a child a few dollars for good grades, but that can't compete with a program in Houston that rewarded both children and their families. Mastering basic math standards resulted in more than a $1,000 payment to each child's family. More and more programs are paying children for good scores on Advanced Placement and college entrance tests.