Disincentivizing Lives

This week’s readings along with the two Dan Pink videos made me think about the role of incentives in human life. It is widely accepted in Economics literature that incentives leads to a positive impact of performance (See Note 1). The authors show that the impact of monetary incentives lead to a positive impact on performance. Recent research has, however shown that this does not hold in all cases. The negative impact of incentives has been demonstrated in pro-social behavior (Note 2), online communities (Note 3) among others. A variety of explanations have been forwarded to explain the negative impacts of incentives including signaling, types of markets, driving out of intrinsic motivations etc. In light of this evidence, Dan Pink revisits a study conducted by Ariely et. al. (2009) (Note 4 for anyone who wants to take a look at the study). Participants of the field experiments conducted in India were assigned to tasks that involved creativity, memory or motor and skills. Participants in the low and mid incentives were found to perform better than those in the high incentive condition. The authors also established that a propensity to choke was not the causal factor behind this phenomenon (Shout out to Carlos Mantilla who brought this up in class).

At this point I want to point out the two key takeaways from this study. Firstly, the authors show that there is a non-monotonic relationship between performance and reward (specifically very high rewards leads to diminished performance). Secondly, for tasks involving cognitive skills, high levels of incentive decreased performance.

Although taking the lessons of this study and applying it directly to assessments in classrooms is a bit of a stretch but I’ll try anyways. My personal experience with grades is that they have to be used appropriately. I do not like to be told and reminded daily about my grades and my rank in class (a system prevalent in most Asian countries). On the other hand in classes where grading scheme is simple, I have found that I tend to work less and take away fewer things from the course. A case of no incentives and very high incentives (or at least sensitivity to incentives), in my opinion, are equally bad. Being an ex-student of economics, I cannot argue for doing away with all forms of incentives. However what I would argue for is to make people and organizations less dependent on numbers generated through tests as a measure of quality. A quality of a student cannot be gauged simply through a number assigned to him/her. The scores assigned to us stay with us throughout our lives and in many cases have a larger impact than we realize. In India, student suicide claimed the life of over 48,000 individuals between 2010-2015 (Note 5). Academic failure was one of the primary reasons. Data collected from American students suggest that, about one-third suffered from depression (the study does not specifically point to grades as a causal factor) (Note 6).

All I am saying is we should not disincentivize people’s lives in order to provide incentives in their academic ones.


  1. Ehrenberg, R. G., & Bognanno, M. L. (1990). Do tournaments have incentive effects? Journal of Political Economy, 98(6), 1307-1324. doi:10.1086/261736
  2. Ariely, D., Bracha, A., & Meier, S. (2009). Doing good or doing well? Image motivation and monetary incentives in behaving prosocially. The American economic review99(1), 544-555.
  3. Sun, Y., Dong, X., & McIntyre, S. (2017). Motivation of User-Generated Content: Social Connectedness Moderates the Effects of Monetary Rewards. Marketing Science.
  4. Ariely, D., Gneezy, U., Loewenstein, G., & Mazar, N. (2009). Large stakes and big mistakes. The Review of Economic Studies76(2), 451-469.
  5. http://www.hindustantimes.com/health-and-fitness/every-hour-one-student-commits-suicide-in-india/story-7UFFhSs6h1HNgrNO60FZ2O.html
  6. http://www.apa.org/monitor/2014/09/cover-pressure.aspx


P.S. This was a late post worthy of a red card.

Source: http://www.glitters20.com/quotes/category/funny/funny-soccer/page/3/