Carrots and sticks
Every political and economic system has at its core a conception of human nature. The one underpinning the leading economic models of today assumes you are rational and self-interested with unlimited wants and tastes that do not change. There is, as Amartya Sen observes, ‘something quite extraordinary in the fact that economics has . . . evolved in this way, characterizing human motivation in such spectacularly narrow terms’.58 Extraordinary as it may be, the extreme and growing levels of inequality in our world are often justified with reference to this ‘spectacularly narrow’ conception of human nature. The argument goes that inequality is necessary to provide the right incentives to increase the overall productivity of the economy. Prevalent assumptions about human nature have led many to conclude that, in order to increase productivity, we should reward what we like and punish what we don’t. However, decades of research have turned these intuitions on their head. External ‘carrot and stick’ incentives often produce the opposite of what their advocates expect.
Behavioural scientists categorise tasks as algorithmic or heuristic. Algorithmic tasks are formulaic in character and can be completed by following a set of instructions; whereas heuristic tasks are creative, requiring flexibility and imagination. Delivering mail is an algorithmic task: it can be broken down into a series of simple steps, a routine to be repeated day after day. Writing a speech is a heuristic task: there is no manual for doing it correctly; each speech requires novel solutions. Research with both children and adults shows that punishments and rewards are effective motivators when it comes to simple algorithmic tasks, but for creative heuristic tasks, they result in poorer performance. Extrinsic motivations ‘crowd out’ our intrinsic motivations. They turn play into work and reduce the satisfaction of that work.
The counter-productive nature of rewards has been observed even with toddlers. A series of experiments at the Max Planck Institute in Germany placed a group of twenty-month-old infants in a room where an adult pretended to need help.59 In the first phase of the experiment, some of the toddlers that tried to help (a majority) were rewarded, while others were not. In the second phase, the helpful infants were given further opportunities to be of assistance to an adult in need. The results showed that the vast majority of the unrewarded group continued to lend a helping hand to the adults (above 80 per cent) but in the rewarded group, a significantly lower proportion continued to help (only about 50 per cent). In other words, material rewards diminished the motivation of the toddlers to carry on helping the adults.
Over the course of numerous experiments, Professor of Psychology Edward L. Deci has found that ‘When money is used as an external reward for some activity, the subjects lose intrinsic interest for the activity.’60 When we are told ‘If you do this, I’ll give you that’ it undermines our autonomy, diminishing the appeal of what had previously been an intrinsically rewarding activity. Although rewards can deliver a short-term boost, the effect soon wears off and often reduces our long-term motivation. According to Deci, we all have an ‘inherent tendency to seek out novelty and challenges, to extend and exercise . . . [our] capacities, and to explore, and to learn’.61 An environment conducive to the full flourishing of these capacities ‘should not concentrate on external-control systems such as monetary rewards’. The results of Deci’s studies suggest that, to truly motivate people, it’s best to empty their minds of financial rewards altogether. This frees them up to engage creatively with the task at hand. Thinking about what we are getting, or what we ought to be getting (perhaps because we are anxious about our financial situation), hampers our creativity.
It has generally been assumed that people are driven predominantly by basic biological needs – hunger, thirst, libido – and the rewards and punishments of their environment. But research on human motivation points to a third crucial drive: ‘the innate need to direct our own lives, to learn and create new things, and to do better by ourselves and our world’.62 Numerous experiments have shown that not only do rewards reduce motivation, they actually hamper our performance. In one famous study, people were asked to solve a problem that required a creative approach. The people who were offered a financial incentive took, on average, ‘nearly three and a half minutes longer’ than those who were offered no financial incentive.63 A study undertaken for the US Federal Reserve System tested the effect of relatively large rewards on a series of challenging tasks. It found that ‘In eight of the nine tasks we examined across the three experiments, higher incentives led to worse performance.’64 Other studies show that this principle also applies to pay-for-performance plans.65 Speaking of his own professional performance, former chief executive of Shell, Jeroen van der Veer, once declared, ‘if I had been paid 50 per cent more, I would not have done it better. If I had been paid 50 per cent less, then I would not have done it worse.’66
In light of such research, we need to reassess our assumptions about human nature, work and motivation. For instance, fairness turns out to be an important motivator. Workers who believe they are being paid fairly are more productive. One experiment showed that increasing the wages of workers who felt they were being treated unfairly boosted productivity, while raising the wages of workers who felt they were already being treated fairly had no effect.67 The implication is that a more equal society would boost overall productivity. It may well be more innovative too. The evidence suggests that the US economy was far more innovative from 1950 to 1970 (when inequality was at a historic low) than it was from 1990 to 2010 (when inequality was growing rapidly).68
To change the conditions of work is to change the experience of doing it. Under circumstances that respect human dignity and give us the freedom to pursue our own passions and be led by our own curiosity, work can be a privilege rather than a burden. Even when it places great demands on us, it can have a positive effect on our well-being. If it is meaningful to us, we can enjoy working on the most challenging of tasks. Part of the problem with so much of the work in today’s economy is that it is not very meaningful or useful. According to a YouGov poll in 2015, 37 per cent of British workers said their job makes ‘no meaningful contribution to the world’ (and another 13 per cent said they didn’t know).69 Most jobs are created to enable companies to increase profits, often in ethically questionable ways. High salaries can be viewed as a form of compensation for the absence of real purpose in these jobs. The choice facing many graduates is to work for free as interns in roles they find meaningful or start climbing a ladder they don’t really want to be on for a salary. Many others are forced into dull, tiring work for just enough income to survive.
We are all motivated to survive and provide for our loved ones, but other fundamental drives shape our behaviour. Contributing to the lives of others is very rewarding, completing a difficult task can be deeply satisfying, and helping those in need can be profoundly edifying. People give their money, even their blood, to help strangers. Teachers, nurses, artists, scientists, inventors, volunteers and activists do hard and valuable work with modest financial reward or none at all. Every day, people leave highly paid yet unfulfilling jobs to seek work in which they can take pride and pleasure. We forsake higher pay for greater freedom. Developing our minds and bodies, and feeling that we are contributing meaningfully to the world around us, is central to our sense of self-worth and well-being.
A growing body of research suggests that we have evolved to take pleasure from helping others. This pleasure ties communities together in mutually advantageous cooperative relationships. One study found that spending money on others makes us happier than spending money on ourselves.70 Another study, by psychologists at the University of British Columbia, showed that before the age of two, toddlers ‘exhibit greater happiness when giving treats to others than receiving treats themselves’.71 What’s more, ‘children are happier after engaging in costly giving – forfeiting their own resources – than when giving the same treat at no cost’. Of course, culture can channel and mould these instincts in various ways but the evidence suggests that the desire to work together and help each other is part of what makes us human.
