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Insanity of Incentives

Writer: AmanAman

Last week was quite messy for me, I was recklessly binging and jumping across tabs on "social" media. It was quite disturbing, especially with the fact that my tests were buzzing on the horizon. So quite resolutely, I thought of using the age old technique of "incentivizing" my own self, hoping that the process would help me focus better.





Things seemed as if they were on the right track, but suddenly I got this hunch of being a stupid moron, of why was I incentivizing "my own self" for the betterment of "my own self", I mean, doesn't everybody know what's right for them? And knowing what's right for them, doesn't everybody DO what's right. Sinking in this crisis, I quickly abandoned the idea of delaying the reward, replacing it with, "If I were to really focus on my exams, I would do it anyway, so why bother with the pain?" And that my dear readers, is how I smoothly slipped back into acting "social" again.



Well, someone even with a crude knowledge of behavioral economics might see what's really going on here, and might also be in a better position than social me to handle situations like mine. Let's look at a field experiment for some context:


A daycare for children was getting increasingly annoyed by the irresponsibility of the parents to pick their wards. The usual business was this- parents would report around 10-15 minutes late, the exhausted caretaker would have to still look after the naughty brats, and offer a simple guilt trip to the parents when they did report.

It went on like this, until a fine of around $3 was imposed on the late comers. But the idea backfired. Now, as a parent, you got the feeling that the amount was quite enough for the trouble of skimming quickly through traffic or for some extra time away from your naughty little trouble makers. And this time, there was no guilt involved as the monetary motivation made it clear that the additional service was being paid for.





And it's not just with monetary incentives, any kind of motivation can backfire if not offered in the right way, to the right people, at the right time, and in the right amount. Offering incentives can turn the problem around on it's head because they might end up changing the core reasons behind why someone was interested in doing the thing in the first place.


The trouble with monetary incentives largely is that they must be substantial when compared with the problem at hand i.e. either pay well, or don't pay at all. But more than often monetary lure is not the best way to move forward with things, rewarding people(and yourself in certain cases) with what they really value can be helpful and motivating in the long run. And it is genuinely hard to decide, since more than often, the boundary between what works and what doesn't is blurred on the basis of conclusions or the end results, so incentivizing people on the basis of assumptions can seriously backfire.


PS: For those interested in the Why of all things human, a helpful resource would be :


 
 
 

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Information is everywhere, but it's meaning is created by the observer who interprets it.

                          - Naval Ravikant

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