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July 2, 2007
Does Tiger Woods ever play golf just for fun?
That's the question that popped into my head when I read this op-ed by Barry Schwartz in the NY Times. You may recall that Schwartz is the author of The Paradox of Choice: Why More Is Less. When this was briefly a hot topic a couple of years ago, I was not impressed with his argument that that we have too much choice. My opinion hasn't changed. But let's hear what he has to say about incentives. The op-ed contains many claims and hypotheses, each of which deserves a rebuttal, so here goes. He writes:
NEW YORK CITY has decided to offer cash rewards to some students based on their attendance records and exam performance. Diligent, high-achieving seventh graders will be able to earn up to $500 in a year. The plan is the brainchild of Roland G. Fryer, an economist who has been appointed as “chief equality officer” of the city’s Department of Education.
The assumption that underlies the project is simple: people respond to incentives. If you want people to do something, you have to make it worth their while. This assumption drives virtually all of economic theory.
Let's pause there because I'm already a little nervous. I feel like I'm walking into a set-up. Honestly, I'm not a big fan of paying students for good grades. I suppose I share the same philosophical objection to it that many people would have. I question whether this is where you would get the most "bang for the buck" in education. It's going to take a lot of convincing to get me to think that this is a good idea. But I'm starting to smell a rat. Follow the logic. An economist proposes paying kids for good performance because people respond to incentives. The social outcome of the plan is debatable, therefore the assumption that "drives virtually all of economic theory" might need some rethinking.
Like I said, it feels like a set-up, but let's see where it leads.
Sure, there are already many rewards in learning: gaining understanding (of yourself and others), having mysterious or unfamiliar aspects of the world opened up to you, demonstrating mastery, satisfying curiosity, inhabiting imaginary worlds created by others, and so on. Learning is also the route to more prosaic rewards, like getting into good colleges and getting good jobs. But these rewards are not doing the job. If they were, children would be doing better in school.
Hard to find anything wrong with that paragraph.
The logic of the plan reveals a second assumption that economists make: the more motives the better. Give people two reasons to do something, the thinking goes, and they will be more likely to do it, and they’ll do it better, than if they have only one. Providing some cash won’t disturb the other rewards of learning, rewards that are intrinsic to the process itself. They will only provide a little boost. Mr. Fryer’s reward scheme is intended to add incentives to the ones that already exist.
Ok, you can't see it, but I'm cringing a bit here. I'm not aware of "the more motives the better" as being an assumption that as economists we frequently call upon. Indeed, the canonical economic models reduce everything to one motive (i.e. the maximization of utility or profit). One can, of course, argue that is problematic as well, but let's leave that for another day.
However, when you drill down a bit, you can see a potential objection. A typical model might work something like this. One can derive utility from intrinsic rewards from some activity. One can also derive utility from things you can buy with money (though in the standard model, not from the money itself). If you receive intrinsic and monetary rewards from doing the activity, the standard model would posit no interaction between the intrinsic benefit and the act of receiving a monetary reward and thus more of either (or both) is preferred to less.
Most of the time, this isn't much of a problem. I like what I do for a living. I get intrinsic benefit from it. I also like the fact that someone pays me to do it so that I can buy other things I like. At the margin I would desire to do more of it if (a) my intrinsic benefit went up for some reason or (b) someone paid me more at the margin.
But what if your intrinsic benefit was affected by the very act of being paid for it? Admittedly, our models tend to ignore the possibility. In our defense, I would posit that the vast majority of applications do not exhibit this phenomenon. However, I'm not ready to dismiss it out of hand. Let's get back to the op-ed.
Unfortunately, these assumptions that economists make about human motivation, though intuitive and straightforward, are false. In particular, the idea that adding motives always helps is false. There are circumstances in which adding an incentive competes with other motives and diminishes their impact. Psychologists have known this for more than 30 years.
Well, by that criteria, all our assumptions (and those of all the social sciences) are false. He says that "the idea that adding motives always helps is false." I'll give him that. "There are circumstances in which adding an incentive..." Ok, fine. But do these assumptions lead to misleading answers in a broad set of applications? Schwartz seems to want us to believe that it does. Obviously I disagree. But neither he nor I have said anything conclusive about the problem at hand--paying students for performance in school.
In one experiment, nursery school children were given the opportunity to draw with special markers. After playing, some of the children were given “good player” awards and others were not. Some time later, the markers were reintroduced to the classroom. The researchers kept track of which children used the markers, and they collected the pictures that had been drawn. The youngsters given awards were less likely to draw at all, and drew worse pictures, than those who were not given the awards.
Why did this happen? Children draw because drawing is fun and because it leads to a result: a picture. The rewards of drawing are intrinsic to the activity itself. The “good player” award gives children another reason to draw: to earn a reward. And it matters — children want recognition. But the recognition undermines the fun, so that later, in the absence of a chance to earn an award, the children aren’t interested in drawing.
Similar results have been obtained with adults. When you pay them for doing things they like, they come to like these activities less and will no longer participate in them without a financial incentive. The intrinsic satisfaction of the activities gets “crowded out” by the extrinsic payoff.
It was at this point in reading the article that I came up with the title for this post. But the real question is even more subtle. Would Tiger Woods play more golf than he does now if he was only doing it for fun and there was no financial reward? Probably not. So Tiger Woods appears to be responding in a standard economic way to the incentives, but the children in the study are not. What gives?
An especially striking example of this was reported in a study of Swiss citizens about a decade ago. Switzerland was holding a referendum about where to put nuclear waste dumps. Researchers went door-to-door in two Swiss cantons and asked people if they would accept a dump in their communities. Though people thought such dumps might be dangerous and might decrease property values, 50 percent of those who were asked said they would accept one. People felt responsibility as Swiss citizens. The dumps had to go somewhere, after all.
But when people were asked if they would accept a nuclear waste dump if they were paid a substantial sum each year (equal to about six weeks’ pay for the average worker), a remarkable thing happened. Now, with two reasons to say yes, only about 25 percent of respondents agreed. The offer of cash undermined the motive to be a good citizen.
It is as if, when asked the question, people asked themselves whether they should respond based on considerations of self-interest or considerations of public responsibility. Half of the people in the uncompensated condition of the study thought they should focus on their responsibilities. But the offer of money, in effect, told people that they should consider only their self-interest. And as it turned out, through the lens of self-interest, even six weeks’ pay wasn’t enough.
That is an interesting result, though I would have the standard set of questions about how it was conducted. Taking it at face value, it's as if the people felt differently just because they were offered money for something that they felt like they had some social duty to do.
Hmmm.... Do you think that people would donate more to charity if it was not tax-deductible? I kind of doubt it. People could always choose not to take the deduction, but most still take it. Presumably, the Swiss people in the survey could reject the money, so the implication is that they feel differently just because they were offered the money. Is it conceivable that just because the government offers us a benefit for giving to charity makes me want to do it less? That is a really tough sell.
On the other hand, prostitution might be an example of an activity in which the act of being offered money changes someone's attitude toward the act. So here's where I come down on this: there probably are some situations where adding a monetary incentive changes things dramatically in a nonstandard way. But they will tend tend to be rather rare situations in which there are strong social mores, attitudes, or pressure to conform to some normative behavior. Is this one of those situations? It deserves further analysis.
Obviously, the intrinsic rewards of learning aren’t working in New York’s schools, at least not for a lot of children. It may be that the current state of achievement is low enough that desperate measures are called for, and it’s worth trying anything. And we don’t know whether in this case, motives will complement or compete.
At least he's honest. He hasn't proved anything, nor have I. The real problem is much deeper.
But it is plausible that when students get paid to go to class and show up for tests, they will be even less interested in the work than they would be if no incentives were present. If that happens, the incentive system will make the learning problem worse in the long run, even if it improves achievement in the short run — unless we’re prepared to follow these children through life, giving them a pat on the head, or an M&M or a check every time they learn something new.
Perhaps worse, the plan will distract us from investigating a more pertinent set of questions: why don’t children get intrinsic satisfaction from learning in school, and how can this failing of education be fixed? Virtually all kindergartners are eager to learn. But by fourth grade, many students need to be bribed. What makes our schools so dystopian that they produce this powerful transformation, almost overnight?
At the conclusion of the article, another thought occurs to me, and it's quite obvious once you think about it. At another level, don't grades themselves represent a system of rewards that distract from the intrinsic benefits of learning? What college professor hasn't dealt with students more concerned with grades than with the real learning? In my Utopian ideal, grades wouldn't be necessary either. But in the real world I believe they are. So the real question here is why the current set of incentives is now less effective at promoting learning than it once was? And my one point of agreement with Schwartz is that the payment proposal could very well distract people from answering that question.
But I think that the basic premise that people respond to incentives could turn out to be very important for the analysis of this issue, even if the idea of paying students for performance turned out to be questionable public policy.
Posted by William Polley at July 2, 2007 12:23 AM
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Comments
Interesting rebuttal. I had only posted on how Jared Bernstein played on the "why do economists make forecast". I had to update my Angrybear post to link to this with the new question emerging - why aren't I paid to go running (albeit not very quickly)?
Posted by: pgl at July 2, 2007 5:40 PM
That's the wrong question. The question is whether you would run more or less if someone did pay you.
Posted by: William Polley at July 2, 2007 11:42 PM
"So the real question here is why the current set of incentives is now less effective at promoting learning than it once was?"
I am not convinced that the current set of incentives was ever significantly more or less effective at promoting learning. Do children learn less today? And, if so, is this the result of deteriorating incentives?
But following your point, increasing competition for better grades at increasingly younger ages does not necessarily require that I learn anything concretely, only that I test well. Parents, teachers or administrators do not demand more learning, per se; instead, improved grade performance (which presumes to measure learning) becomes their collective mantra. And children respond in the most efficient way possible--allotating their scarce time, to use Angry Bear's words, and focusing on their grades.
Take away their parents' motive for instigating this frenzied level of competition (reckless consumption ensured by high-salaried employment ensured by a prestigious university education ensured by a solid SAT score and good grades) and you might approach a more active LEARNING environment unsullied by anything more nefarious than the simple pleasure of learning for learning's sake.
Posted by: el dormilon at July 3, 2007 11:37 AM
el dormilon,
I think there is convincing evidence out there that young people are less proficient in certain areas than they were in years past--writing, for example, is the one that I seem to hear about a lot. But like everything, it is complicated. Talented and motivated students today probably learn more than in the past. Students in some disadvantaged schools seem to be losing ground on standardized tests, but don't get me started on how that is a less than perfect measurement.
I have often wondered (who hasn't?) if there is a crowding out problem in that the social and entertainment aspects of youth have eaten into study time. But then what do I know? I'm not citing any research (there probably is some); I'm just calling on 17 years of observing college students first as a student and then as a professor. If we want to talk about how economic theory would predict what happens here, it's a simple case of a shift in preferences for a substitute good. Unless prices adjust, there will be substitution. I find that to be a very compelling argument. But that does not mean that I would necessarily favor paying for grades.
Your comments on grades and tests versus real learning are spot on. You're describing my Utopia. Sadly, my reality is different. Grades and tests are a signal (albeit an imperfect one). I am very frustrated by the fact that grades and standardized tests take on the importance that they do. But I can't see that it is at all realistic to talk about taking away the motives you state.
After all, it's just people responding to incentives.
Posted by: William Polley at July 3, 2007 11:27 PM
Polley
I'm the guy from the other blog who said he wouldn't read this if you paid me.
But you sounded like such a nice guy i felt a owed you a look.
I don't think there is very much difference between what either you or Schwartz said and what I would say at any given time. There is too much complexity in the situations at issue to decide them all or none according to one factor.
Not terribly important, but the first thing that hit me was that "they" were proposing to reward the "dilligent and successful" (probably misremembered that a bit)...exactly the kids who don't need the reward. the question should be what are they going to do about the kids who are not dilligent.
a little more important... but I know that my opinion is not more important than your opinion... is that i think you are a little too close to your economic model. and even when you say "the real world" you don't seem to understand that it may not be the "real" world, but the world produced by the illusion that rewards work.
you sound like a reasonable and decent guy. i don't know if it is humanly possible to back out of a paradigm that forms a core assumption of your life's work, but i bet you can, and you can gain insight ... though perhaps not a new model ... and not give up as much by it as you might think.
then the for what it's worth department: on the first day of the first time i took first year economics i knew the basic assumptions being offered me had nothing to do with the world as i knew it.
eventually i was to have to learn to deal with people who took those assumptions as more important than god.
i don't see any way to win the "argument" but for me, i am happy that i am able to keep a certain distance from "rewards."
Posted by: coberly at July 5, 2007 1:03 AM
Great to have you as a reader. I hope you'll be back. These sort of topics seem to come up a lot, so I would guess I'll be writing on the subject again soon. Thanks for dropping by the blog!
Posted by: William Polley at July 6, 2007 11:17 PM