Is Daniel Pink Confusing Us About Motivation And Economic Incentives?

A couple of days ago I ended up in a "video trading" episode with Norma. She wanted me to watch this one, a mock radio broadcast, from a few folks at Michigan State. Norma liked the message of the show, particularly the bit near the end that a lecture was a lecture and can't we do better than that. I was less impressed with the video. Technique-wise it was too cutesy for me and message-wise I thought it was a bit too much singing to the choir. Focusing on the technique, I responded with this particular RSA Animate video, which is compelling to view even if I don't fully subscribe to its economic message. Since our group is constantly looking for ways to improve communication between instructor and students, I sent it partly to provoke Norma on whether it were possible to produce some of the effect of the video without the need for skilled animators. Norma responded with this other RSA Animate video that features the voice of Daniel Pink, reflecting on that video triggered this post but I didn't view it for a while. Then, getting back to a critique of the first video Norma had sent, I responded that I didn't believe faculty who lectured and were skeptical about the benefits of learning technology would be convinced by that video. This presentation by Eric Mazur (where he does lecture himself quite a bit) is more convincing because he talks not just about his teaching but also about the students response and in that describes "plug and chug" a method for arriving at the answer while not illuminating at all why the answer is correct. So Mazur had a need to change the teaching method because the students weren't "getting it."

I mentioned to Norma when we went for a coffee that I had seen Pink's TED talk so I knew most of what he was going to say. But afterward I felt that was too smug of me, so I did watch the RSA Animate video. I found it off putting so I watched again to figure out why. It begins with an attack on a straw man version of homo economicus, which given my disciplinary affiliation may have roused my hackles. But it's what he says later in the presentation that I believe is truly pernicious.

Pink is a very slick presenter and he does emphasize an important point, which I put in my own words as follows:

Main point of Dan Pink's talk: When we are already intrinsically motivated applying extrinsic motivation, in the form of reward for good behavior or punishment for bad behavior, is self-defeating because it detracts from the intrinsic motivation, a much more powerful force.

I completely agree with this point. When intrinsically motivated we lose sense of ourselves. We are totally into the activity, whether reading a great book, watching a fascinating movie, or working through a problem or puzzle that has captured our attention. The object of that attention becomes the entire universe. It is as if we are in a bubble that we are permitted to remain inside so long as we focus only on its contents. Extrinsic motivation of any kind makes us self-conscious. It bursts the bubble. Intellectually, it is like holding up a mirror. Once we look at ourselves, it is very difficult if not impossible to re-enter the bubble.

Some examples from the world of sport bring home this point forcefully. In the movie Chariots of Fire there is a scene were the coach, Sam Mussabini, is teaching the sprinter, Harold Abrahams, about why the one American sprinter, Jackson Scholz, lost the 100 meters race in the previous Olympics to his compatriot, Charles Paddock. The slide shows Scholz looking not straight ahead but rather to his side so he could eye his competition. The looking askance cost Scholz the race and the prize of being known as the "World's Fastest Human." In the recently completed British Open, the gracious and understated champion, Louis Oosthuizen, repeatedly gave the response to interviewers before he started the final round that what he must do on the course was to "stay in the moment" and not "get ahead of himself." He had an idiosyncratic method for doing that, with a red dot on his golf glove that he would look at just before making his swing, a reminder to focus on what was at hand. Golf more than sprinting gets at what Pink is talking about with tasks that require cognitive engagement because most of the time the golfer is planning and considering his next shot. So high caliber golf is mainly about management and planning. Then that gets interrupted periodically by the need to make shots.

Unfortunately, Pink can't leave well enough alone. His presentation creates the impression that we have a complete understanding of the psychological and economic incentives when acting in concert. On the latter he says the following: (The full transcript of the presentation is here.)

Fact: money is a motivator at work, but in a slightly strange
way. If you don't pay people enough they won't be motivated.
What's curious is there's another paradox here, that the best
use of money as a motivator is to pay people enough to take
the issue of money off the table. Pay people enough that
they're not thinking about money, they're thinking about the
work. Once you do that, it turns out there are three factors
that science shows lead to better performance, not to mention
personal satisfaction: autonomy, mastery, and purpose.

This is a bad message for the rest of us to hear, at least in this form, because it creates the impression that the bubble can be preserved. That is wrong. Even sans the economic considerations, the bubble will eventually burst of its own accord. The movie ends; we finish the book we are reading; we find a complete resolution of the problems we have been working on. And economic incentives can intrude entirely from the outside. In solving that set of problems we come up with an interesting and novel resolution. Word about that gets out, in large part because others are interested in the solution. But then, some of that interest gets transformed into interest about us. Though we were happy with the job and what we were getting paid in it, that was then. This is now and now the situation is different. Or, perhaps more realistic at present, the economic downturn has forced the old economic relationship to become untenable. Now there has to be downsizing or wage givebacks or other economy measures to keep the institution afloat. These are changes unrelated to individual performance. They are nonetheless present and force employees to be self-conscious about their own employment.

I have been singing the praises of Maslow as of late. Maslow argues there is an ongoing tension in all of us. We must make a choice for growth or for safety. Having made one such choice we are soon confronted with another. Maslow is extremely generous in regarding the individual, arguing essentially that the choice made is always the right one because the safety needs are in conflict with the growth needs (which are realized by putting ourselves in a bubble) and while the latter are higher level the former are primary. The individual only opts for growth when safety appears assured and the individual himself is the best arbiter for when this is the case. (This seems entirely consistent with what I took to be Pink's main point.)

Pink does rightly point out that economic incentives are mainly about eliciting participation. Call it "buy in" if you will. But the need to do that is definitely not one and done. Just as with the individual choice for growth or safety, the economic unit must elicit participation of each individual on an ongoing basis. There is therefore an inherent tension between the next elicitation of participation and the desire not to want to burst the current bubble. Sometimes the schedule for annual performance reviews and annual salary increases (remember those?) comes while the employee is immersed in an important project. A supervisor does his or her best to balance these two out. There is no magic formula to manage both of them perfectly.

* * * * *

Now I'll be more pedantic and get at Pink's straw man. Pink begins with a presentation of a tournament or contest, where higher performers get greater rewards and then Pink segues to a piece rate scheme where an individual performer gets more reward the more (or the better) he produces. Pink seems to confuse the two though they are actually quite different and should naturally emerge in different circumstances. He then goes on to imply that economics taught us long ago the lesson that one of these two schemes is the best way to elicit effort out of people. When I was in graduate school (the late 1970s) the rage was implicit contracts, the birth child of Arthur Okun. There were no tournaments or piece rates in Okun's conception. Wages were flat and sticky. There were two core underlying reasons - risk aversion and fairness. Risk aversion argued that units which were large enough to diversify against economic risk should absorb risk from others who couldn't diversify. So firms should absorb the inherent productivity risk of their employees. Fairness meant that similar employees should be treated similarly. When performance differences could be readily attributed to idiosyncratic variations that the employees couldn't control, that meant flat wages instead of tournaments.

The implicit contract view was about long term relationships and required fulfillment of promises on both sides of the market in exchange for which both earned "economic rents" from the relationship. For their part, employees were obligated to fully engage in the work. Implicit contracts provide a view about work that I embrace and I believe many others do as well. Yet it is not perfect. Long term relationships based on promises rather than contractual agreements are subject to one or both parties "cashing in" at the expense of the other party. Indeed, this is a serious problem. But rather than focus on how to best mitigate the problem we seem to have arrived onto the belief that it is not possible. Enter Pink's straw man, who resides in a much more myopic universe.

Implicit contracts don't perfectly resolve the tension between encouraging intrinsic motivation of employees and eliciting their participation. Nothing does. But implicit contracts do give a much better tradeoff than does the naive economic incentives that Pink takes to task. Because of his visibility, Pink could do a big service to the economy as a whole by embracing a more sophisticated view of the economics part of the equation. In the meantime, the psychologists rule and the economists drool. And the rest of us scratch our head about how to get even a glint of intrinsic motivation into our employees as the economy remains in the crapper.