How Monetary Rewards Can Demotivate Creative Works

from the it's-the-link dept

Back in April, I wrote a post about Daniel Pink's new book, Drive, in which he highlights the rather stunning amount of counterintuitive research that suggests that money can actually make people less motivated to do creative works. Since then, I got a copy of the book myself, but it's in the stack with about five books that I want to get to before it, so I may not get to it for a while. However, a lot of folks have been passing around this great video of a 10 minute presentation that Pink did, which was then whiteboard animated. It's really well done and fun to watch and basically summarizes the idea in the book:
The same point is made in the presentation, but it clarifies it a bit. It's not that money isn't important. That finding would make little sense at all. As people note all the time, you need to be able to make money to survive. But, it's that once people have a base level of money that makes them comfortable, using monetary incentives to get them to do creative work fails. Not just fails, but leads to worse performance. As we noted in the original blog post about this, my initial inkling was that this highlighted a point often forgotten by economists and non-economists alike: while marginal benefit is often considered in terms of dollars, that doesn't mean that cash is the the equivalent of marginal benefit. That is, you can't just replace other benefits with cash. Sometimes people value other types of rewards even greater than the equivalent in cash. And, Pink's book and presentation highlight how it's often things like meaning and working on something fulfilling that are much more beneficial to people than cash. So it's not that money is bad for creativity -- but that having a direct pay-for-performance type scheme seems to create negative consequences when it comes to cognitive work (it works fine for repetitive work, however) -- and other types of non-monetary rewards are a lot more effective.

And while it isn't discussed in the presentation (and I don't know if it's discussed in the book), I wonder if the high monetary rewards in a "if you do this task, we'll give you $x amount" manner actually has a strong cognitive cost. That is, the pressure to then do the task well in order to "earn" that money actually ends up causing a creativity cost that takes away from the output. When you're just doing creative work for non-cash rewards, the pressure doesn't feel quite as strong. When you put the dollar signs in, it adds mental costs, and those costs outweigh the cash rewards. It's even possible, then, that the higher the cash reward, the greater the mental costs.

Related to all of this, Clay Shirky has also just come out with a new book, Cognitive Surplus (which isn't yet in the pile on my desk, but probably will be soon) that builds on an idea that he's talked about for years: about how all these claims that people doing stuff online for free is a "waste" totally misses the point. For the past few decades, people have devoted billions of hours to watching television. Yet, with the internet, rather than watching TV, they're actually doing some creative work (sometimes for free). So when looked at in isolation, doing stuff for free may seem weird, when combined in the larger scheme of things as a substitute for mind-numbing TV watching, it's actually a huge advancement.

Wired had the smart idea of having Shirky and Pink sit down and chat with each other, and they rehash some of these ideas, and how the concepts put forth in the two books seem to overlap. Moving people away from merely consuming content towards creating content leads to a huge boost in creativity and creative output -- exactly what we've seen happening. And, it's not because of monetary incentives -- in fact, it's often because of the exact opposite.

The more you think about it, the more this all makes sense, and the more you realize just how screwed up so many incentive structures are today, because so many people think that purely monetary incentives work best.

Filed Under: behavior, clay shirky, daniel pink, drive, economics, money, motivation

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  1. identicon
    Anonymous Coward, 6 Jun 2010 @ 2:01pm

    Re: Re:

    I think sometimes people are motivated by a genuine need, not an artificial one. If people think their jobs serve a scarcely served role to society some tend to be more motivated. If people feel that their jobs aren't scarcely served roles because we already have technology capable of doing all the work and so you're just getting paid to meet a need that would be met perfectly fine without you, some people will lose motivation. Everyone is different though, generally I tend to think self interest and profits are what motivates people when it comes to work but not then again many people are often charitable and so other things clearly motivate people when it comes to non work issues. I think the key is to create work that serves charitable needs at the same time or at the very least to foster a system that enables those who want their work to serve a charitable. Our current IP system prevents that, those who want to conduct R&D and innovate for the sake of helping society (and getting paid at the same time) have to worry about which selfish person has a patent on what and will sue them. But clearly there are plenty of people willing to give their labor away and ask for voluntary donations for those willing to give, look at GPL and other free software and operating systems and look at how much people volunteer their time to charitable causes as well. The ultimate cost of anything is raw materials and labor and the acquisition of raw materials requires labor, so people are willing to put plenty of work into writing free software and operating systems (which takes a lot of time), this is evidence that people are just as willing to contribute to R&D on drugs and technology and whatnot for free and perhaps ask for donations in return (and others are willing to donate their time (since money is a product of time and labor) to fund those they see who produce the most innovation). But when we have a legal system that assumes that everything should be monopolies everyone is afraid of the legal costs, settlement fees, and judgments of contributing their labor to society to fund R&D and whatnot and this makes innovation and goods and services much more expensive and scarce. Now granted, some people are selfish, but I don't think granting them a patent really helps solve anything. It just disables those who are willing to volunteer their time from contributing to society because they have to worry about who has a patent on what. The assumption that people are self interested is generally true but it's not complete and not everyone is the same and we need a system that enables people to voluntarily help one another out.

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