The Cost of Cash Incentives

Ours is a market-driven society. Are there some things, though, that money cannot buy or should not be able to buy? Michael Sandel suggests that friendship, wedding toasts, gifts, school admissions, and organs for transplant are the sorts of things that should not be commercialized. Market values risk making some practices unfair (e.g., private school legacy admissions that privilege students from wealthy families) and dissolving or corrupting others (e.g., voluntary blood and organ donations). At stake, Sandel argues, are civic virtues of solidarity and altruism that make for better communal lives.

I believe Sandel is right to worry about the cost to communities of reducing everything to a price. It is for this reason that I question the use of financial incentives to induce African Americans to embrace “good” behaviors—everything from donating bone marrow to attending school.

Human tissue donation is the moralist’s paradigm of the sort of thing that should be isolated from pure market values. But in the United States, donors are already paid for blood, and widespread payment for bone marrow may be around the corner.

In December 2011 the Ninth Circuit Court of Appeals held in Flynn v. Holder that criminal provisions of the National Organ Transplant Act banning compensation for organ donation do not apply to peripheral blood stem cell apheresis, the technique of bone marrow donation common today. Plaintiffs in Flynn went to court seeking the green light on a financial incentive plan designed by The plan was to induce mainly minority and mixed race individuals to donate in exchange for $3,000 in scholarships, housing allowances, or gifts to charities.

Why pay minorities for their cells? Due to a long history of health care disparities, African Americans do not have the same level of trust in the health care system that whites have and are less likely to donate blood or a kidney to a stranger. This means there is a shortage of marrow for transplantation from persons of complex genetic heritage, and African Americans sick with leukemia or rare anemias have difficulty locating compatible unrelated donors.

It would be hard to object to monetary incentives if they significantly increased the donor pool for life-saving tissues. But there is an argument to be made that inducing African Americans with cash promotes the stereotype that our community is not only needy but also especially materialistic. The more we are offered money for ethically and socially desirable behaviors, the more we could come to expect it, erecting a what’s-in-it-for-me cultural norm on the ashes of the unselfish morality that spirited the civil rights movement.

I question the use of financial incentives to induce African Americans to embrace ‘good’ behaviors.

Cash is being directed at African Americans to improve not only health but also education outcomes. About 40 percent of African American high schoolers don’t graduate, and spotty attendance is a chronic problem. Dohn Community High School in Cincinnati, a charter school that serves a largely minority and low-income population, recently adopted an incentive program to encourage students to attend class. Perfect attendance earns $10–25 per week. Will it work? History suggests reasons for skepticism.

In 2007 the New York City public schools adopted a related plan in an effort to address the achievement gap between minority and white children. Schools Chancellor Joel Klein and Harvard economist Roland G. Fryer endorsed the pilot initiative, under which students in selected schools could earn $500 per year for regular attendance, test-taking, and good scores. Their parents were promised $200 per month or more for holding down full-time jobs, having health insurance, attending school conferences, and getting their kids to school.

Economic theory predicted success for the New York plan. The payouts were premised on the plausible-sounding assumptions that money today is a better incentive than the abstract promise of economic well-being tomorrow; that working for money, as opposed to grades, is not perceived as “acting white”; and that cash can help parents help their children learn by paying for babysitters, after-school programs, and transportation. Yet at the end of the pilot year, Fryer found that students offered cash performed no better or worse than other students.

Even if incentive programs can improve performance on standardized tests or learning-related behaviors, there may be costs. Students may not grow to love learning before the cash rewards disappear. And Sandel’s criticism of the market-driven society suggests another cost. Schools should teach each child that his or her education is important to the community, and in ways that are not reducible to a simple sum. Leadership, character, rigor, and self-discipline are valuable to the common projects of one’s neighborhood and nation. The emphasis on cash incentives risks drowning out the call for excellence and public service. African Americans deserve to hear the call too.