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
    Darryl, 6 Jun 2010 @ 2:55pm

    Yes, star trek utopia - where's the synthathol ?

    This is all a very nice, Utipian, Star Trekkie type world you are proposing. And ive been trying to think of actual real examples of invention or innovation that is not financially motivated, there are some, yes, and alot in history, but things were simpler than, the cost of training, and equipment, and living is much higher now.

    Sure, money is often not the ultimate incentive for creativity, or invention, or design.

    After all, you're referring to things like modern products, and things that we find value in. (latest mobile phones, high speed internet, high speed computers etc).

    Sure, the GROUP of people who designed the CPU for you're PC would no doubt love electronics and engineering, (lord knows I do).

    And some of them, would most certainly have a strong personal interest in the subject, like a keep amateur. (I do). I will write software, and design electronics at home, in my spare time because it's great fun to do.

    But, going to work, is how I live, how I am able to retire and how im able to feed, house and support my family, and if im lucky enough I will have a wad of money in the bank for my family for when I kick it.

    But if you have ever worked in a design house, or somewhere where creativity and invention is a requirement, you will know that no one walks around all day putting a money value on their work, or competing for more money.

    They think about how to solve specific probems with the resources on hand. They think about the engineering and the product, not the bottom line, or their pay packet.

    Their pay has been worked out well before hand, every week they get a cheque, pay their mortgage, save a bit, and go to work.

    Rarly, very rarly will an engineer or scientist stop working in the field he loves if he gets that magical 'enough money'. Money is not a demotivator, it is a motivator.

    Speak to rich CEO's or rich business people, they will clearly state they have more than enough money to live several lifetimes, but they still work !, they use money made as a guage of their success.

    Same with engineers, and designers and scientists, money is not everything, but it allows you to have a house to stop you getting wet, a car to allow you to get to work, insurance, food and all the other things critical to invention and innovation.

    Im sure, if engineers were always worrying about where their next meal is comeing from, or where they are going to sleep that night, they would be less concerned on how to make a smart work better.


    Reverse the argument, look at countries what do not reward invention and innovation with money. Fixed income countries, im refering mainly to communist and socialist countries.

    If this theory was correct, those states would be hives of invention and innovation in every area. They should be world leaders in nearly (if not) everything.

    And the capitolist countries would be laggin behind, fill of fat rich highly skilled engineers, retired and watching TV.

    But that actually does not seem to be the case does it ?

    OK, dont believe me, of the top of you're head name 5 large and successful high technology, innovative companies in the Eastern Block Countries ?

    Even FOSS, free and open source, which tries to some degree to follow the 'for the love of it' mantra, is certain not an innovation minefield, it's quite good at immitation but innovation,, no so much.
    As well, all the 'big players' in the FOSS world are PAID!

    One of the only organisations that I know of, and am a member of, is TAD. You might want to look at that organisation as an example of innovation for things other than financial.

    TAD, Technical Aid for the Disabled, we invent, design and build specialised equipment to meet specific disabilities of people. It's 100% volenteer, and it's not done for self reward at all, it's not done to increase you're standing or name or to show off you're skills.

    It's done for one purpose, to provide some equipment to make someone elses life easier. It's 100% about them.

    But without a paying job, and without millions of dollars training and education, and without some large organisation providing the facilities and equipment to allow me to do my job, and to design and invent things. It would not be possible.

    Just as it would not be possible to use my spare time, creating and innovating products for people for free, if I had to worry about where my next meal is coming from, or how im going to pay for the electricity that is running my computers.

    Sure, there are millions of people now 'innovating', with blogs and on the web, but it's not really contributing anything greatly of value to society, and therefore the rewards for their work are comensurate.

    Google, Email, the WWW, computers, electronics, the Transistor, CRT and computer monitor, mouse, keyboard, satellite phones, GPS, WiFi... the list is endless, or modern and significant innovations, all created for financial incentive, and by people highly skilled, trained and at a high monetry cost.

    So for me, someone who has been in engineering, and science and electronics/computers all my life, it would not matter if I was earning 10 million a year or just enough to get by on, I would still love what I can do, and do it to the best of my ability regardless.

    Very few if anyone I know would do otherwise, sure, if you are unlucky and hate you're job, you might want to tell the boss to F*&^ YOU, and walk out the door.

    But you find in the creative fields, money is not the prime motivator, but a guage of you're perceived worth.
    Therefore money is the reward and incentive to do better, be more productive and more skilled. And one follows the other.

    The highly skilled, and experienced engineers get paid the most, they are the senior engineers, and the junors who are still learning, who are not as productive are paid less.

    If a senior engineer, becomes less productive than the junor, then questions will be asked and eventually he will be sacked, or demoted.

    But engineers rarly get worse, you learn more things and gain experience throught you're career, you love what you do, so you would do it anyway, but you like everyone else likes to know you are valued, and you're income is that indication.

    If you are valued in a company, and you are able to support youre self and your family, then that is more than enough motivation to do their best.

    Ive never met an engineer that does not want to do the very best they can, after all that is why they became an engineer, or some other creative field.

    You think a painter will product a better or worse painting because of the potential financial rewards? I dont think so.

    A painter, like an engineer, will do the best he/she can everytime, for their own gratification and rewards.

    Sure, if you digging holes, or punching number plates, (manual labour) as you put it, you assume there is little or no pride or satisifaction from that.

    Often that is true, the satisifaction those workers get is the money, the ability to support themselves and their family, to pay for kids education and so on, and even factory workers take pride in their work, and strive to do better, to enjoy what they do, to gain more from that work than just money.

    Everyone does, it appears that only in those countries that do not focus on financial and living improvement for production and invention, are the countries that do not progress nearly as fast as those that do.


    TAD - Technical Aid for the Disabled.

    Volenteer group, what creates for the only reason to provide equipment or things to make people with a specific disabilities life better.

    We do not chage for labour at all, and quite often source and purchase the raw materials and components ourselves.
    Something we could not do if we did not have jobs and incomes.

    So there are example of innovation and invention for non-money reason, and even non-selfish reasons, it's all about helping others.

    But it would not be possible without a strong economy and well paid people, with the spare money and time to dedicate to that work.
    There still is no social model, where that ultrueistic system is or can be the ONLY system.

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