School of the Future: Fees > Fines

In “Fees vs. Fines,” Morgan Housel says,

“The last three months of 2018 was the worst quarter for stocks in seven years. The first three months of 2019 was the best quarter for stocks in 10 years.

“Question: Is that volatility a fee or a fine?

“Fees are something you pay for admission to get something worthwhile in return.

“Fines are punishment for doing something wrong.

“It sounds trivial, but thinking of volatility/drawdowns/uncertainty/pain/terror/ulcers as fees instead of fines is an important part of developing the kind of mindset that lets you stick around long enough for compounding to work.

“Few investors have the disposition to say, ‘I’m actually fine if I lose 20% or more of my money.’ This is doubly true for new investors who haven’t experienced a 20% decline.”

Now imagine that Housel is writing about school assessments rather than market investments.

When adults treat failures as “fines,” typical learners tell themselves that they can’t afford to rack up more bad grades (“fines”). So they focus on giving the teacher exactly what he wants. The result? Fragile learning.

On the other hand, when we treat failures as “fees,” we liberate students to invest their energy in understanding what didn’t work and to correct course. Those “fees” compound over time, producing resilient learning. (Mastery-based learning offers the ideal model for this kind of culture.)

Schools of the Past and the Present treat failure as a fine.

Schools of the Future will treat failure as the “tuition one must pay for success” (attributed to Walter Brunell).


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Christian Talbot