Incentives

My eldest son is in the 1st grade and his world is full of incentives. Every hundred books he reads, he gets a certificate from his teacher. If he’s helpful to his teacher he receives a 10 cent voucher to spend at the school canteen. If he’s often and conspicuously helpful, he’s presented with a certificate and an ‘Aussie of the Month’ badge in front of the whole school. And teachers control large groups of children with arbitrary races – ‘Who’s the first to be quiet with their hands on their head?’. The kids love it.

Incentives are offered to children because they work. They work because the kids perceive them to be valuable, but they’re used by teachers because they have a low cost. Incentives to children contain little intrinsic value.

In the corporate world there are also a great number of incentives – public praise, a higher position on the corporate ladder, social status, a glass office and a BMW for a company car. At Christmas time employers give hampers, throw big parties and give awards. And employees love it. You love it.

Incentives are offered to employees because they work. They work because you perceive them to be valuable, but they’re used by your employer because they have a low cost. Your incentives contain little intrinsic value.