What happens to motivation when incentives end?

If you’re temporarily paid to do something, would that change your motivation or interest in doing the same thing when you’re not paid to do it anymore? Indranil Goswami investigated this long-standing question for his dissertation with me, which I’ll get to soon.  But first, some background.

Psychologists and economists have long debated the effectiveness of incentives.  From the viewpoint of economics, it’s simple, almost definitional.  Economics is fundamentally about how incentives shape human behavior. Much of the empirical research in economics is about how incentives –overt, hidden, and even perverse — influence and explain people’s behavior. While this view can be summarized simply as “incentives work!”, identifying what the incentives are can be tricky and open to debate, and the definition of what constitutes an incentive has been broadening.  Andreoni , for example, introduced the idea of a “warm glow” (or good feeling) that a person may get from donating to others as an incentive that can explain altruistic behavior.

Psychologists tend to think in terms of internal mental processes and motivators, and have historically been skeptical of external incentives, seeing such incentives, particularly monetary incentives, as impure and interfering with people’s true or “intrinsic” motivation.

Which brings us to one of my favorite papers, a comprehensive review by Deci, Koestner and Ryan (1999) of how incentives affect intrinsic motivation. They look for experiments that tested how motivated people are to do a task without compensation, after they had been temporarily paid to do the task. In the paper, they painstakingly gather up research findings, including unpublished studies in order to deal with publication bias, categorize the differences in experimental methods and then summarize the average findings (using meta-analysis).  Their main results are summarized below (from p. 647 of the paper):


What they’re looking at here is the “free choice paradigm”, where people in a lab study are paid to do an activity (such as drawing), and then are put in a situation where they could do more of the activity or do some other activity, with no compensation for any of the options. Their decision whether or not to do more of the activity is compared with the same decision among people who were never paid for the activity in the first place (a control group).

Based on 101 such studies, it looks bad for incentives (d= -.24, at the top of the graph). People paid to do the activity then do less of it when the payment is no longer available than if they had never been paid in the first place.  From a classical economics perspective, this may appear weird – if you like drawing, then you should draw, whether you were previously paid to draw or not. To many psychologists, the reason seems clear: paying people changed how they viewed the activity, undercutting the intrinsic motivation that made it fun in the first place.

As the figure illustrates, the experiments vary a lot, and so do the results. Verbal rewards (i.e., praise) has positive effects on subsequent motivation (the opposite finding), at least for college students. The negative effects are driven by tangible rewards (e.g., money), in situations where people are paid conditional on something: trying the activity, completing the activity, or achieving a particular performance in the activity.

What does this mean?  The proposed theory centers on feelings of autonomy: people do things in part to feel good about having done it themselves,. When someone else comes in and provides a conditional reward, it eliminates the ability of the activity to provide the autonomy benefit.  And here’s the key: this is assumed to be a long-term change in how the activity is perceived and experienced.  As a result, there’s a risk to using incentives.  As they warn in the paper:

“if people use tangible [i.e., monetary] rewards, it is necessary that they be extremely careful… about the intrinsic motivation and task persistence of the people they are rewarding” (p. 656)

I’ll look more closely at this implication this week, including our new data.

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