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Overjustification

I have always loved psychology and behavioral economics because it’s like a cheat sheet for human behavior.

While it may have helped me in life, business, etc – it’s helped the most in dealing with our kids. One of the key ideas I’ve tried to remember is that of overjustification (or more accurately, the overjustification effect). It’s the idea that if you pay someone to do something they already do for intrinsic rewards, the extrinsic reward replaces the intrinsic reward.

For example, if your kid enjoys reading, don’t start paying them to read more books. Eventually, the payment becomes the new reward and it replaces the intrinsic reward. I think that’s a bad outcome.

Like many things in psychology, it’s controversial because the line is not always so clear. We believe it happens more easily in children than with adults, for example, but is a child someone who is 10? 15? 20?

Either way, I wanted to share a new study that adds a wrinkle to the idea:

Do Monetary Incentives Undermine Performance on Intrinsically Enjoyable Tasks? A Field Test [MIT Press Journals] – “Economists have long been intrigued by an influential literature in psychology positing that monetary pay lowers performance on enjoyable tasks by crowding out agents’ intrinsic interest in them. But typical experiments in this literature do not report a full set of performance metrics, which might reveal conflicting evidence on crowding out. Further, they may suffer from confounds. To evaluate these issues, we review over 100 prior tests and run a field experiment building on the canonical two-session test for crowding out wherein agents receive pay for an interesting activity in session one that is withdrawn unexpectedly in session two. We test whether pay harms performance using a comprehensive set of performance measures, and if so, whether unmet pay expectations might also contribute to this decline. Our results on output, productivity and quits are most consistent with a standard economics model than with a crowding out one. Additional, though more speculative, evidence suggests that unmet pay expectations may harm output quality.”

If you want to continue with me on the behavioral highway, I recommend this video by Simon Sinek:

It talks about the role of EDSO – endorphins, dopamine, serotonin, oxytocin (and cortisol) – within the context of work. I think it applies to a lot of areas in our lives and it’s important to know why we do the things we do. (ie. why do you check Facebook or your email so often? that’s ole dopamine at work)

Finally, a fun little article about how the uber rich in Silicon Valley are enjoying the quarantine. 🙂

“All These Rich People Can’t Stop Themselves”: The Luxe Quarantine Lives of Silicon Valley’s Elite [Vanity Fair] – “Travis Kalanick is throwing (outdoor) parties, private-jet owners are hopping from safe zone to safe zone, and dinner party hosts are administering 15-minute COVID-19 rapid tests—all business as usual. “Coronavirus is a poor person’s virus,” says one source.” Yikes.

See you tomorrow!

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