A vexing question for a parent, particularly an economist, is whether or not to reward your kids monetarily for higher school grades. Let me admit right here that this is how I was raised: something like 10 dollars for every subject I got an A, 5 dollars for a B and nothing for anything less.
From a standard economic point of view, the question is a no-brainer: the long-run advantages of doing well at school are enormous but ill-recognised by a young kid. Hence, more short-term monetary incentives repair the inability of the kid to rationally invest in the far future. Even if one has an exceptionally far-sighted kid, the damage of further rewards is minimal, so no harm done by rewarding them with money.
An array of further arguments goes the same direction; if parents get status-rents out of a kid that does well at school, then monetary rewards are basically a form of compensation for the effort the kid puts into producing services of value to the parents. Similarly, by introducing monetary compensation one encourages academic competition between siblings, further enhancing the academic success of all of them. The setting of monetary incentives furthermore prepares them for the world of work, as good school outcomes are primarily a ticket to that world anyway. Etc.
What about the negatives? One of the good reasons many parents don’t go in for it, I suspect, is because they have kids who differ a lot in academic ability and don’t want to end up giving one kid lots of money for high grades whilst the other kid has to suffer. So if the kids are far apart in ability, it is tough to do this.
Another possible reason is if one doesn’t want to crowd out internal motivation. This, I feel, depends a lot on the kid and the culture of the parents. If kids are prone to be motivated by things they know their parents find important, then the crowding out seems far-fetched. Indeed, parents offering money is then a symbol of their appreciation for grades. But if the kid is prone to want the opposite of what the parent signals to value, then offering money could lead them to tune out of the world of school completely just to avoid thinking of himself or herself that they are complying.
So who should pay for good grades? People whose kids are closely-matched in ability, prone to competitiveness, somewhat short-sighted, and eager to please the parents anyway.