For example: in Belgium, in recent years a lot of kids are (often) given points for effort so they can pass a certain grade. More and more the case. I talked to a teacher friend about this, and while he thinks its great, I think it's ridiculous. Do we want a society of people who put in some effort yet achieve nothing?
Now, not that I think the educational system shouldn't be flexible and account for the fact that not everyone has the same level of intelligence or ability (everyone is different + has different talents, which is great!), but you can end up with some weird situations. Add to that the fact that the people who become teachers are generally of quite low quality (very few bright minds end up teaching) and you can easily see the quality of education declining.
While grades are to be looked at on a case by case basis (and I'm aware people don't often find their passions and talents until later in life), I don't believe that you should get (too much) points for effort. You don't get points in life for effort either.