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INCENTIVES. An interesting op-ed by psychologist Barry Schwartz in this morning's New York Times explains how seemingly straightforward incentive schemes can fail in practice. A series of experiments have shown that when you add a self-interest incentive to an activity that has other incentives already attached to it (enjoyment, personal betterment, health, etc), you can actually reduce adherence:
An especially striking example of this was reported in a study of Swiss citizens about a decade ago. Switzerland was holding a referendum about where to put nuclear waste dumps. Researchers went door-to-door in two Swiss cantons and asked people if they would accept a dump in their communities. Though people thought such dumps might be dangerous and might decrease property values, 50 percent of those who were asked said they would accept one. People felt responsibility as Swiss citizens. The dumps had to go somewhere, after all.But when people were asked if they would accept a nuclear waste dump if they were paid a substantial sum each year (equal to about six weeks’ pay for the average worker), a remarkable thing happened. Now, with two reasons to say yes, only about 25 percent of respondents agreed. The offer of cash undermined the motive to be a good citizen.It is as if, when asked the question, people asked themselves whether they should respond based on considerations of self-interest or considerations of public responsibility. Half of the people in the uncompensated condition of the study thought they should focus on their responsibilities. But the offer of money, in effect, told people that they should consider only their self-interest. And as it turned out, through the lens of self-interest, even six weeks’ pay wasn’t enough.Schwartz is outlining these arguments to criticize Mike Bloomberg's plans to pay children for doing well in school. "It is plausible," he writes, "that when students get paid to go to class and show up for tests, they will be even less interested in the work than they would be if no incentives were present. If that happens, the incentive system will make the learning problem worse in the long run, even if it improves achievement in the short run — unless we’re prepared to follow these children through life, giving them a pat on the head, or an M&M or a check every time." Isn't that exactly what we're doing, though? You show up to work and do well, and every two weeks (or month) you get a check. And every few years, that check gets bigger. Seems to work out alright. We may not end up with a nation of philosopher-kings, but for now, I'm less interested in increasing comprehension of Plato's Republic than in increasing retention rates. That said, Schwartz's op-ed describes a few other interesting experiments, and the idea that the profit-motive can crowd out other, more effective, incentives, is an important one.--Ezra Klein
