When a kid focuses on good grades to attain some immediate reward, they have NO incentive to actually learn anything. They want to pass, to get points, to make the grade, for relatively short-term gratification. Incentivising learning in grade school or college to pay out for good grades would not help kids actually do better. It would only cause kids to scramble quickly to get the reward and do whatever it takes.
Can you point me to any references that back this up? I am interested in reading more about this.
I can not. This is my own casual study observed with the rest of my colleagues, of other colleagues' performance in class. Basically, we've just watched people and asked why they do what they do, and then see if they actually know what they're doing after the classes are done. No papers, no documents; we just do it to prove we are right about how the school system is flawed in many respects. I can share what I know if you have more specific questions, but I'm an engineer, not a social psychologist. I don't even write papers...