Praise: Substitution versus Income Effects
By Bryan Caplan
Touchy-feely parents shower praise on their kids. “Great job!” “You’re super smart!” “Wonderful.” Old-school parents do the opposite. “You could have done better.” “A-?” “That won’t get you into Harvard.”
Why the chasm? The real story, I suspect, is emotional rather than strategic. Parents praise or withhold because that’s what feels right to them. The charitable story, though, is that strategy is central. The two archetypes factually disagree about the effect of praise on performance, and act accordingly.
The pro-praise story: Praise is a form of reward. The greater the rewards of success, the more effort kids exert.
The anti-praise story: Yes, praise is a form of reward. But the more rewards kids rack up, the more satisfied they feel. The more satisfied they feel, the less effort kids exert.
Framed this way, the pro- and anti-praise debate boils down to the intermediate micro analysis of the substitution and income effects. Does paying people more (or taxing them less) make them work more or less? The strange but true answer is: It depends. “The greater the rewards, the greater the effort” makes sense. But so does, “The more rewards you have, the less you crave further rewards.” The great “to praise or not to praise” debate fits elegantly into this framework.
Or does it? Consider: Touchy-feel parents also typically avoid shaming their kids. Old-school parents, in contrast, shame freely. Here, then, old-school parents seem to rely on the substitution effect – the greater the cost of bad behavior, the smaller the quantity. Touchy-feely parents, in contrast, seem to tacitly appeal to the income effect: A shamed kid will act even worse because he has so little left to lose.
Personally, my parenting style embraces the substitution effect in both directions. I happily praise good behavior, and sternly (though not angrily) criticize bad behavior. That’s definitely more consistent than either of the classic archetypes, and seems to work well for my kids. But perhaps that’s an illusion – or an outlier. From a bird’s eye view, which view of praise and blame has the facts on its side?