Free Market Values

Or, Laissez-Faire Morality

From Merriam-Webster: Demoralize - 1 : to corrupt the morals of.

As in: "The offer of money undermined the moral force of people's obligations as citizens."

In Drive: The Surprising Truth About What Motivates Us, Daniel Pink writes how studies indicate that, beyond a certain level, paying people more money produces poorer performance instead of better; if you want people's quality and productivity to get worse, then you should increase their pay.

That seems counter-intuitive, but it appears to be the truth.  How exactly does that work?  I'm nearly finished listening to Practical Wisdom: The Right Way to Do the Right Thing by Barry Schwartz and Kenneth Sharpe.  They argue that rules and incentives are not enough to motivate people to have the skill and will to perform well, that we instead need "practical wisdom" to guide us, and they show how rules and incentives can undermine practical wisdom.

This, as you may guess, is not a new area of thought for me.  In What Do You Want to Learn Today? I wrote about how I believe extrinsic motivational factors often undermine intrinsic ones in the context of library users:

I don’t like the way this trivializes the learning experience, as I said, and makes it all about extrinsic motivation and external gratification—it implies people will only enjoy learning if they get constant rewards and recognition.  Doing these things might make the experience more fun for those who aren’t motivated to use the library on their own, but implicit in the model is the idea that learning is a laborious, demotivating process that people can’t enjoy without incentives.

I radically disagree, both philosophically and based upon my personal experiences.  If you have interest in a topic, the act of learning is its own reward.  The process of discovering new information, personalizing it, and putting it to use is fun in and of itself—without bribes and badges—and adding those things undermines the inherent intrinsic motivation of the process.  There are probably some good ideas on the surface of the presentation, some practices we can modify and put to good use, but the philosophical underpinnings of the presentation are counterproductive, from my point of view.

I also thought about library use when reading Predictably Irrational by Dan Ariely, particularly when reading a section about the motivation of parents in a study of an Israeli day care.  Too many parents were late to pick up their children, so the day care tried imposing fines for lateness.  That actually made the problem worse, and it remained so even after they decided to take the fines away and return to the previous system.  Why?  They had taken something that was operating in the realm of social norms and moved it into the realm of market norms.  The market norms weren't as motivating and undermined the social norms; and once the situation was defined in market norms they stuck, making the return to social norms nearly impossible.  Read about it more fully in Thinking About Library Fines.

I requoted a part of that in another post, 2 x 2 = 5, where I expanded on the idea as it was complemented by another book, Sway: The Irresistible Pull of Irrational Behavior, by Ori and Rom Brafman.  I wrote:

I've shared feedback at work that I don't care for the practice of rewarding those who take the time to complete trainings and surveys with the chance to win gift cards in a drawing. It makes me feel like I'm being bribed our bought, that I'm motivated to do such things because it's the right thing to do and adding prizes somehow soils the purity of my participation. Both books explore this dynamic. Both include the example of asking a friend to help you move. Most of the time, friends are happy help do so as friends. But if you offered to pay them $10, they'd feel insulted and much less likely to help. They might accept $100 or what they consider a fair wage for their labor, but they'd rather do it for free than an insulting amount.

Ariely describes this dynamic in terms of social vs. market norms: So we live in two worlds: one characterized by social exchanges and the other characterized by market exchanges. And we apply different norms to these two kinds of relationships. Moreover, introducing market norms into social exchanges, as we have seen, violates the social norms and hurts the relationships. . . . when a social norm collides with a market norm, the social norm goes away for a long time.

The Brafmans approach the dynamic through brain science, looking at the physical response to the different exchanges: It's as if we have two "engines" running in our brains that can't operate simultaneously. We can approach a task either altruistically or from a self-interested perspective. The two different engines run on different fuels . . . It turns out that when the pleasure center and altruism centers go head to head, the pleasure center seems to have the ability to hijack the altruism center.

Schwartz and Sharpe cover similar territory in Practical Wisdom under the heading "Motivational Competition" in the chapter titled "The War on Will," writing how using market, self-interest incentives demoralizes people.  They also write about the Israeli day care as a prime example, then follow with this:

Another example of the demoralizing effects of incentives comes from a study of the willingness of Swiss citizens to have nuclear waste dumps in their communities.  In the early 1990s, Switzerland was getting ready to have a national referendum about where it would site nuclear waste dumps.  Citizens had strong views on the issue and were well informed.  Bruno Frey and Felix Oberholzer-Gee, two social scientists, went door-to-door, asking people whether they would be willing to have a waste dump in their community.  An astonishing 50 percent of respondents said yes--this despite the fact that people generally thought sucha  dump was potentially dangerous and would lower the value of their property.  The dumps had to go somewhere, and like it or not, people had obligations as citizens.

Frey and Oberholzer-Gee then asked their respondents whether, if they were given an annual payment equivalent to six weeks' worth of an average Swiss salary, they would be willing to have the dumps in their communities.  They already had one reason to say yes--their obligations as citizens.  They were now given a second reason--financial incentives.  Yet in response to this question, only 25 percent of respondents agreed.  Adding the financial incentive cut acceptance in half.

These studies of Israeli parents and Swiss citizens are surprising.  It seems self-evident that if people have one good reason to do something, and you give them a second, they'll be more likely to do it.  You're more likely to order a dish that tastes good and is good for you than one that just tastes good.  You're more likely to buy a car that's reliable and fuel efficient than one that's just reliable.  Yet when the parents at the day care center were given a second reason to be on time--the fines--it undermined their first reason, that it was the right thing to do.  And the Swiss, when given two reasons to accept a nuclear waste site, were less likely to say yes than when given only one.  Frey and Oberholzer-Gee explained this result by arguing that reasons don't always add; sometimes, they compete.  When the Swiss respondents were not offered incentives, they had to decide whether their responsibilities as citizens outweighed their distaste for having nuclear wastes dumped in their backyards.  Some thought yes, and others, no.  But that was the only question they had to answer.

The situation was more complex when citizens were offered cash incentives.  Now, they had to answer another question before they even got to the issue of accepting the nuclear wastes.  "Should I approach this dilemma as a Swiss citizen or as a self-interested individual?  Citizens have responsibilities, but they're offering me money.  Maybe the cash is an implicit instruction to me to answer the question based on the calculation of self-interest."  Taking the lead of the questioners, citizens then framed the waste-siting issue as just about self-interest.  With their self-interest hats squarely on their heads, citizens concluded that six weeks' pay wasn't enough.  Indeed, they concluded that no amount of money was enough.  The offer of money undermined the moral force of people's obligations as citizens.  Morality is for suckers, the offer of money seemed to be saying, even if only implicitly.

A substantial body of research done with children and adults confirms these findings. . . .

So the more we define ourselves as purely self-interested individuals with only market concerns, the less moral our decisions and transactions will be.  The more purely capitalistic our free market structures and institutions are, the less concern we'll all have for others and any sense of the common good.

Now, Schwartz and Sharpe are quick to point out that monetary exchanges are still necessary and in some transactions there aren't any moral or other incentives for the financial ones to crowd out, just like Pink acknowledges that some types of work are best suited for carrot and stick motivational methods and if the financial rewards for work are too low then no other factors matter.  There are times when market motivations are best.  So, just as purely capitalistic systems won't lead to caring, cohesive societies, neither will purely non-capitalistic ones.  As I quoted David McRaney from his book You Are Not So Smart in Objectivity: A Concept That Only Exists As Truthiness
 of "The Public Goods Game":

THE MISCONCEPTION: We could create a system with no regulations where everyone would contribute to the good of society, everyone would benefit, and everyone would be happy.

THE TRUTH: Without some form of regulation, slackers and cheaters will crash economic systems because people don't want to feel like suckers.

Human nature won't allow us to rely on either pure altruism or pure self-interest as motivations, and the best model seems to be a hybrid that finds the right balance of both.  In our current political battles, the liberal democrats argue for systems and structures that institutionalize altruism and care for others as government responsibilities in order to take the market values out of the equation.  Conservative republicans argue for more personal responsibility driven by self-interest so that we don't have dead weight that everyone else has to carry.  In McRaney's terms, the liberals are concerned with the cheaters and the conservatives with the slackers.  Both are right, it's just a matter of negotiating the right balance of both concerns for the greatest combination of personal success and common well-being.

I, of course, along with my sources quoted above, feel the balance needs to be tipped further away from free market, self-interested values before we'll have enough common well-being as a society.  It can't all be about money.

If you want a little more without having to track down and read any of these books, this video is a really nice condensed presentation of the core ideas in Pink's Drive: