of money and markets in our societies? Today, there are fewer and fewer things that

money can't buy. If you're ever sentenced to a jail term in

Santa Barbara, California -- just in case that happens to you -- you should know that

if you don't like the standard accommodations, you can buy -- if you have the money, you

can buy a prison cell upgrade. [ Laughter ]

>>Michael Sandel: It's true. For how much would you guess? What would you say? How much

would that be? >> (Speaker is off microphone.)

>>Michael Sandel: $500? Per night? It's not the Ritz-Carlton. It's not --

[ Laughter ] >>Michael Sandel: It's just slightly -- it's

$90 a night. If you go to an amusement park, used to be

at amusement parks part of the experience was waiting in long lines for the popular

rides. Everybody had to do it. But that's not really true today. In most amusement parks,

if you don't like waiting in long queues, you can buy a -- pay more and buy a fast-track

ticket straight to the head of the line. In fact, it's not just at amusement parks.

There are more and more aspects of life today where you can buy your way to the head of

the queue. You can do this even if you want to hear -- sit in on a Congressional hearing

in Washington, D.C. but you don't want to stand in the long line for the seats that

are made available. You can now go to a company. One of them is called linestanding.com. You

pay them a certain amount of money. They will hire a homeless person or someone else who

needs the work to stand in the line, overnight if need be, to make sure that you get a seat

in the front row of the hearing room, buying your way to the head of the queue.

But also, the role of money in markets is also shaping bigger institutions.

Take the way we fight our wars. In Iraq and Afghanistan, there were more private military

contractors on the ground than there were U.S. military troops.

Now, this isn't because we had a public debate about whether we wanted to outsource war to

private companies, but this is what has happened. Over the past three decades we've experienced

a quiet revolution. We have drifted, almost without realizing it, from having a market

economy to becoming market societies. The difference is this: A market economy is

a tool, a valuable and effective tool, for organizing productive activity. But a market

society is a place where everything is up for sale. It's a way of life in which market

values and market thinking begin to invade and to govern almost every aspect of life.

Why worry about this? Should we worry about it? That's the question I'd like to discuss

with you today. And I do mean "discuss." I'd like to put to

you a question and get your views about a novel use of a market mechanism, a cash incentive,

to achieve a social good. In many schools around the world, there is

the struggle to motivate young people to study hard, to work hard, to aspire. Especially

schools with many kids who come from disadvantaged backgrounds.

In the U.S., many of the major urban school districts have been experimenting with the

use of a cash incentive to motivate academic achievement. They've tried this in New York,

in Washington, D.C., in Chicago. Cash for good grades -- $50 for an "A," $35 for a "B"

-- for doing well on standardized tests. In Dallas, Texas, they have a program that

pays young children -- 8-year-olds -- $2 for each book they read.

Now, I'd like to see what you think about this. The aim is obviously a good one: To

lift up academic performance. And yet some people object.

So let's begin with a show of hands. We'll take a quick poll here.

Imagine that you are in charge of a big school district and someone comes to you with this

proposal: Cash incentives for good grades, high test scores, or to read books.

How many of you here think that would be worth a try and how many, as the head of the school,

would object and would rule it out? So let's see by a show of hands.

How many think it would be worth a try? [ Show of hands ]

>>Michael Sandel: And how many would be opposed in principle?

[ Show of hands ] >>Michael Sandel: All right. The majority

here are opposed in principle, but a healthy minority think it would be worth a try.

Let's begin by hearing from those of you who reject the idea outright, who don't even want

to give it a try, who have an objection in principle.

Who will start off our discussion? We have people with microphones, so tell us

-- someone who objects -- why do you object? Yes. Stand up and tell us why. We'll get you

a microphone. >>> I think you should have children have

intrinsic motivation, so I don't think there should be incentives through cash.

>>Michael Sandel: And by -- tell us your name. >>> I'm Amanda Jobbins from The Sage Group.

>>Michael Sandel: Amanda... >>> Jobbins. Amanda.

>>Michael SandelAnd Amanda, you say children should have intrinsic motivations to learn.

What do you mean by that? What does that mean concretely, and why would money interfere

with intrinsic motivations? >>> Well, I think it's a life skill that you

have to be -- you have to have intrinsic motivation, so self-motivation, and I think cash reduces

the chances that they'll develop motivation on their own. They'll always be motivated

by external stimulus. >>Michael Sandel: And so if you pay for good

grades or to read books, what are they going to learn? What do you worry about?

>>> That they'll only ever do things for money and I think that life is about more than just

money. >>Michael Sandel: Okay. Thank you for that.

That's a strong objection. Now, who thinks it would be worth trying the

cash incentive scheme and -- Go ahead. And what would you say to the argument

Amanda has just presented? >>> I think it is a very idealistic view.

I think people who come from unprivileged families will never be told that learning

is important, and if there is an incentive to make them grow and learn more about society

and give them opportunities, we should go full speed at it.

>>Michael Sandel: And what's your name? >>> Veronique.

>>Michael Sandel: Veronique? Amanda, here, stand up and speak.

Amanda, Veronique says you have a hopelessly idealistic view.

[ Laughter ] >>> I live in Europe. I'm an optimist.

>>Michael SandelSee if you can persuade Veronique that this is -- that there's something wrong

with this. >>> I suppose it just comes down to whether

you think money is the only important thing in life or whether people are only motivated

by money. So I'd like to think that people are motivated

for other reasons. I do understand that if you come from a family,

perhaps, where education wasn't valued very highly, that in certain circumstances that

might prompt you, I guess, to take a move, but it's also been my experience that people

that have the opportunity for education, that come from an underprivileged background, tend

to value the education anyway and find their own motivation as a consequence to work their

way out of poverty. >>Michael Sandel: All right. So is there someone

else who would like to disagree with Amanda who thinks it would be worth trying, at least,

to see if it works? Yes. Toward the back.

>>> 10 years ago, I was in a high school in Indiana and it was the same situation. You

saw people that were not really motivated taking part of the discussion, and the test

was not cash but candy, and it worked in the beginning quite well, so the people were raising

their hands, they were participating, but one day the teacher didn't have candy anymore

and, yeah, they just stopped. It was conditioned, you could say. Even like

Maslow, you could say "Okay, there's no candy, why should I raise my hand and participate?"

>>Michael Sandel: So you're against? >>> I'm against, but I saw in the beginning

it worked. So for the short term, I would say you can

see an increase, and if someone would measure in the beginning, it would be a positive thing,

but -- >>Michael Sandel: But when the money stops

or the candy -- >>> Yeah.

>>Michael Sandel: -- so, you fear, will the reading?

>>> Yes. >>Michael Sandel: All right. Is there anyone

who wants to defend this? Yes. Go ahead. Stand up.

>>> Hi, Michael. I'm not sure "defend" is the right word, but I would say that all the

people who say, you know, cash incentives are wrong, bear in mind, anyone who's got

kids, everything is a negotiation of some sort of another, and kids get offered cars

if they pass their exams -- >>Michael Sandel: Cars? So cars. That's more

than $50 for an "A." [ Laughter ]

>>Michael Sandel: A car. >>> You don't want to do that for everyone,

but I'm sure there's enough people in this room who have been through that, but --

>>Michael Sandel: Well, wait. Let's see if that's true.

What's your name, by the way? >>> Marco.

>>Michael Sandel: And were you paid to study? >>> Yes.

>>Michael SandelYou were. >>> I was incentivized to pass all my exams

and I got a car. >>Michael Sandel: A car.

>>> It was only a little car. [ Laughter ]

>>Michael Sandel: And so it worked? >>> I think -- I mean, it worked on one -- on

some level, but I think to Amanda's point, there's still an intrinsic desire to succeed

as well. >>Michael Sandel: And do you pay your kids

for good grades? >>> Well, he's 3 at the moment, so --

>>Michael Sandel: 3. [ Laughter ]

>>Michael Sandel: Will you? >>> I pay him with in Peppa Pig or something

like that. >>Michael Sandel: All right. Well, thank you

for that. Thank you to everyone who participated in this discussion about cash for good grades.

[ Applause ] >>Michael Sandel: I should say something about

what happened with these experiments. The results were mixed. The cash for good

grades and higher test scores in most cases did not result in higher grades and test scores,

but those kids who were paid $2 for each book did read more books. They also read shorter

books. [ Laughter ]

>>Michael Sandel: But the larger -- the larger question -- the larger question is one that

has emerged from this discussion. The worry is -- and Amanda articulated it.

The worry is that somehow bringing money or a cash incentive into teaching and learning

will corrupt or undermine or drive out the intrinsic love of reading and learning.

And that's a question that we need to ask whenever we're considering whether money and

markets should be introduced in aspects of life that involve attitudes and values and

norms, lessons that may be non-monetary values. A friend of mine pays his young children $1

for each thank you note they write, you know, if they're taken out to dinner or are given

a gift. I've received some of these thank you notes

and I can tell by reading them that they were written under a certain pressure.

[ Laughter ] >>Michael Sandel: My wife and I look askance

at this practice. We wonder how these kids will turn out.

Now, it could be -- this is the optimistic scenario -- that by being paid to write thank

you notes, they will get in the habit of it and they will eventually learn the real reason

for writing thank you notes -- to express gratitude -- in which case, when the money

stops, they will probably continue to write them and all will be well. Or it could happen,

as Amanda fears, that by being paid to write thank you notes, the lesson they will learn

is that writing thank you notes is a chore, a form of piecework to be done for pay. If

that's the lesson they learn, then when the money stops, so may the thank you notes. They

may find it difficult ever to learn the virtue of gratitude and their moral education will

have been corrupted. That's the question. It's also a question that happens in larger

settings throughout our societies. Some years ago in Switzerland, they were trying to decide

where to locate a nuclear waste site. No community wants one in its backyard. They identified

a small town in the mountains of Switzerland as likely to be the safest place, but under

the law, they had to get the approval of the residents, so before the decision was made,

a survey was done of the residents of this Swiss town and they were asked: If Parliament

chooses your town, would you be willing to approve the nuclear waste site here.

Despite the risks, 51% said yes. Then they asked a follow-up question. They sweetened

the deal. They said suppose parliament chooses your town and offers financial -- annual financial

compensation to each resident of the town. I think it was up to as much as 6,000 Euros

a year, then would you vote to approve? Now how many do you think said yes? 80%. Fewer?

>>> Yes. >>Michael Sandel: It dropped in half, from

51 to 25%. Now, from the standpoint of standard economic

analysis, this is a paradox. Normally when you offer to pay people to do something, the

willingness to do that thing increases. Why did it drop in half? Anybody have any ideas?

It was the Swiss, you're saying. [ Laughter ]

>>Michael Sandel: But the question is: What were they thinking?

>>> They felt corrupted. >>Michael Sandel: They felt corrupted? Well,

they might have thought -- now, you might say, well, once they were offered money, they

thought this really could be more dangerous than I thought. That could be one reason.

But it does seem -- it does seem that they tested and found that the estimate of the

risk before and after the monetary offer was about the same. So there must be another explanation,

which is probably to do with this idea of feeling corrupted.

They asked the people, who changed their minds, why did you change? And many of them said,

We didn't want to be bribed. We didn't want to be bribed.

See, before when the majority were willing to accept, they were willing to make a sacrifice

for the sake of the common good, out of a sense of civic responsibility.

But when money was offered, it changed the nature, the money changed the nature of the

transaction. Now instead of a civic question, it was a

financial or a pecuniary one. They were not willing to sell out the safety of their themselves

and their families for money. So here we have a range of cases that illustrate the way in