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The reward is the personal achievement of beating the game at a higher difficulty.
Do you need a pat on the head in the form of an achievement or something?
Participation awards were a mistake.
For those that want the extra challenge, higher difficulties are the reward itself.
As far as the ability to lower the difficulty: well, I think that's there so that people who wrongly estimated themselves in either direction could adjust that.
You can play it on Very Easy if you don't understand the mechanic or don't enjoy the gameplay. People who do want to play the game and undestand the mechanic will play on higher difficulty. This is video game, not a book.
It's more enjoyable when you know and use what the game give to you to the extend but it also make the game too easy. it is fulfilling in itself for me at least
Plus, for an RPG like this you might choose the highest difficulty and realize that halfway through you're way underleveled and don't have fun with the grind. If it were hardwired in your save, oops looks like you need to redo anywhere from 20-50 hours allllll over again to get to where you were. With this, at least you can enjoy the story at your own pace. (Plus, you might learn way later on the only difference between Hard and Very Hard is that you only gain 1/3rd of the exp and money in V. Hard and that doesn't actually make it "harder" so much as just more a grind so you lower it to hard just for the challenge without grind. Or tweak the difficulty exactly how you want it! I personally keep the lower EXP but keep money gains the same since to min-max your s. links you NEED that money to have the right persona in your list)