Economics 1 Q10
Human motivation is at once complex and simple. It is simple in that the neurological processes governing motivation have evolved through natural selection to maximize the survival of their genes. It is complex because humans are social animals so this optimization involves relationships with other individuals who share differing amounts of genetic material. Furthermore these systems evolved over long time periods to cope with a very different lifestyle than most people currently lead.
The human motivation system evolved before money or legal systems had been invented. Instead goods were directly and immediately exchanged and providing services depended on trust based on reputation and relationships with those involved. Thus, reputation and relationships are key components in human motivations.
Monetary incentives can decrease or eliminate these relationship and reputation components. Money is culturally associated with greed and shallowness which in most cultures are seen as negatives. Thus by accepting the monetary incentive the person is admitting to their greed and shallowness which damages their reputation. Similarly, by offering the monetary incentive you are implicitly communicating that you think that person is greedy and/shallow which can damage the relationship you have with that person. Thus if the motivation induced by the monetary incentive is smaller than the relationship and reputation motivation it destroys then there will be a net decrease in motivation - the monetary incentive will be de-motivating.
For example, consider trying to motivate someone to lose weight. The most successful ones used in the weight-loss industry are: 1) to build the self-esteem of the over-weight person such that they are motivated to preserve their reputation by losing weight (eg. Richard Simmons) and 2) to build relationships between people trying to lose weight such that they will be motivated to lose weight so they aren't letting down their friends (eg. Weight Watchers). Adding a monetary incentive would undermine these approaches potentially decreasing the participants net motivation.
Similarly, monetary incentives will be less or even de-motivating for occupations with a reputation for altruism (eg. teachers, firefighters, charity workers) than for occupations with no such association (eg. banking, manufacturing, etc..) if they are not combined with relationship and reputation rewards (eg. praise, gratitude).
Experiments have shown that monetary incentives actually produce poorer productivity for creative work than for menial/repetitive tasks. I would argue that can be explained by a decrease in the reputation-motivation induced by the monetary incentive. Reputations are enhanced more by quality than by quantity thus the reputation motivation inspires quality in creative tasks which is a greater determinant of productivity than quantity for such tasks (10 bad adverts are not better than 1 good one). However for menial/repetitive tasks there is little room for quality improvement thus little reputation to be gained so monetary incentives are effective to increase the quantity of work thus better productivity.
Thus, monetary incentives are de-motivating whenever it fails to provide a motivation in excess of the loss of the motivation derived from the desire to build and maintain one's reputation and the loss of the motivation derived from the desire to maintain our relationship with the person trying to motivate us.
