What is a Token Economy?

A token economy is a behavior-modification program in which targeted behavior is reinforced with tokens (secondary reinforcers) and later exchanged for rewards (primary reinforcers). The method is based on operant conditioning. 

In operant conditioning, the likelihood of a specific behavior is increased or decreased through positive or negative reinforcement each time the behavior is exhibited, so that the subject comes to associate the reward or punishment with the act, and thus will increase or decrease the frequency of performing that act.

A good token economy system has five major components:​​

• Tokens – many things can be used as tokens. They are usually physical objects such as tickets or poker chips or marbles. It can be a star on a chart. The token itself is a neutral stimulus.
• Target behavior – the behavior to reinforce. Ideally a “do” behavior rather than a “don’t”.
• Rules – clearly stated understanding of how tokens are earned or lost.
• Backup reward – tangible rewards for which a designated number of tokens can be exchanged. They are reinforcers that the participants value.
• Procedures - method of exchanging tokens for backup rewards.

In a token system, the neutral stimulus (token) can be exchanged for a primary reinforcer (backup reward) such as tangible items, activities, snacks, money, privileges, or other incentives. The token becomes the secondary reinforcer encouraging the target behavior. Good behavior is reinforced by repeatedly presenting tokens with the desired behaviors. The token needs to be given immediately. The rewards require some delay of gratification.

In some token economies, tokens can be added or removed. One such variation is a response cost system. In a response cost system, tokens are taken away when an inappropriate behavior appears. The token loss is the cost of that behavior. A response cost system is generally used to suppress challenging behavior.

Researchers find that when reinforcement and response cost are combined, the target behavior increases more than when reinforcement is used alone. However, despite the benefits, there are two major drawbacks.
First, there is more negativity when response cost is used. This is problematic if any attention (negative or positive) is in and of itself reinforcing.

Second, a management system solely based on punishment is less likely to encourage positive behaviors in participants​​. So, if the target behavior is not occurring much at baseline, the response cost system is just another form of punishment, not behavior modification. Plus, if there are no tokens to remove the system falls apart.

For these reasons, It is suggested that a token economy program start with a reinforcement system. One way to add in a bit of response cost is to make certain rewards temporarily unavailable as a result of a major infraction.

Other versions of a token economy system may require the participant to buy access to an event with a token and either earn two tokens for successful participation or forfeit the admission token for any infraction. Variations on the basic token economy program can enhance skills of planning and self-regulation.