I have mixed feelings about projects like this one, which seem to spring up every now and then. And, precisely because they never seem to be too successful, I have very real doubts about them.

Having witnessed (and even practiced a little) experimentation with similar schemes along much more modest lines -- like candy bars, etc. I can attest that children can display the very worst features of their elders -- such as greed, disillusionment, envy, etc. and that as the stakes rise so do the worst qualities. For even relatively 'trivial' stakes (like the candy bar, or continuation on a sports team) I saw kids cheat, pressured to cheat, steal, whine, get mad, etc. To a certain extent that is simply expected behavior of children, but when you throw "real" money into the mix, things escalate quickly.

Another problem is that incentive is often relative to how much wealth the child already has. You will need to offer more money to motivate kids who have access to more money. But then aren't you just making the rich richer and discriminating based on class? A lot of kids, even poor ones, already have cell phones. And often a kid who is malnourished and poorly clothed still has 'pocket money' to throw around. To motivate them you will need to offer "real" money, and invite all the trouble that brings.

And, to be terribly cynical (and probably realistic), aren't we really going to be paying them to "test well"? If educational bureaucracies are going to be judged on how well kids test, then they will feel compelled to "pay off" the kids to get higher test scores. I doubt money will be awarded for creative painting (or for creative writing) or for asking provocative questions, etc. etc. but rather for scoring XX points on the SuperDuper(TM) Test. And hey, if kids being physically unfit is a problem, then why not institute professional athletics in the primary schools?