Thursday, December 27, 2007
Monday, December 3, 2007
Discussion with Jonathan, Economics Prof
Question:
Jonathan, I still have trouble accepting that everything has a study to prove or disprove it. On page 230 the text says,
"While economists universally agree with this proposition (that compensation is the only motivator), some social psychologists or organizational behaviorists argue that there are other reasons employees work. They suggest that offering explicit incentives such as compensation could actually reduce job performance and productivity by eliminating the intrinsic desire to carry out some activity. Their argument is based on the belief that individuals often have pride in their work and enjoy carrying out required tasks and that paying people to carry out some task reduces the intrinsic enjoyment of that task. Thus, they argue, firms should appeal to intrinsic motivation rather than compensation if they want workers to perform well."
First of all, this paragraph makes the concept sound ridiculous, and oversimplifies it grossly. Secondly, the test arrogently proclaims that "no evidance has been provided to show that it plays any kind of important role"
What is the assumption here? That every aspect of work and of society has had a study done about it and that if there is no "evidance" prooving something it has no merit? Studies and "proof" are very expensive and have to be paid for by someone and done by someone, and it seems to me that very few of our interactions have been formally studied such as this.
Our world is full of people who are motivated by much more than compensation. The use of Mother Teresa as an example doesn't match the rest of their thesis that compensation must come from an exterier thing that companies "give" their employees. Isn't the motivation to work for the intrinsic value of work also a kind of compensation? According to their argument about Mother Teresa it would be. So why ridicule the social scientists? Much compensation is internal and can't be controlled by a firm or company.
Answer:
Not everything does have a study, but it is amazing how many things do. Studies are never definitive either. Each study is just one more piece of evidence. E=MC^2 is just a theory with a bunch of studies that back it up (and it has a lot more evidence than any economic theory), but it is just a theory and it could be falsified by future studies.
I don’t think “economists universally agree with this proposition (that compensation is the only motivator)”. Economists nearly universally agree that increasing someone’s monetary compensation will increase their incentives to do something. That is what some psychologists disagree with. There are psychological studies that show cases where increasing someone’s compensation can decrease their incentive. Economists usually ignore these examples as mere anomalies, but I find them fascinating.
The idea that "no evidance has been provided to show that it plays any kind of important role" is just that nobody has been able to figure out how to pay people less (everything else constant including working conditions) while increasing their incentive to work. However, you CAN increase people’s incentive to work by making them feel like they are making a difference in the world (non-profits and gov’t often pay less money, but people still work for partly altruistic reasons – and the military relies as much on patriotism as on salaries) or by making employees feel like they are part of a community or team with social support.
-Jonathan
Jonathan, I still have trouble accepting that everything has a study to prove or disprove it. On page 230 the text says,
"While economists universally agree with this proposition (that compensation is the only motivator), some social psychologists or organizational behaviorists argue that there are other reasons employees work. They suggest that offering explicit incentives such as compensation could actually reduce job performance and productivity by eliminating the intrinsic desire to carry out some activity. Their argument is based on the belief that individuals often have pride in their work and enjoy carrying out required tasks and that paying people to carry out some task reduces the intrinsic enjoyment of that task. Thus, they argue, firms should appeal to intrinsic motivation rather than compensation if they want workers to perform well."
First of all, this paragraph makes the concept sound ridiculous, and oversimplifies it grossly. Secondly, the test arrogently proclaims that "no evidance has been provided to show that it plays any kind of important role"
What is the assumption here? That every aspect of work and of society has had a study done about it and that if there is no "evidance" prooving something it has no merit? Studies and "proof" are very expensive and have to be paid for by someone and done by someone, and it seems to me that very few of our interactions have been formally studied such as this.
Our world is full of people who are motivated by much more than compensation. The use of Mother Teresa as an example doesn't match the rest of their thesis that compensation must come from an exterier thing that companies "give" their employees. Isn't the motivation to work for the intrinsic value of work also a kind of compensation? According to their argument about Mother Teresa it would be. So why ridicule the social scientists? Much compensation is internal and can't be controlled by a firm or company.
Answer:
Not everything does have a study, but it is amazing how many things do. Studies are never definitive either. Each study is just one more piece of evidence. E=MC^2 is just a theory with a bunch of studies that back it up (and it has a lot more evidence than any economic theory), but it is just a theory and it could be falsified by future studies.
I don’t think “economists universally agree with this proposition (that compensation is the only motivator)”. Economists nearly universally agree that increasing someone’s monetary compensation will increase their incentives to do something. That is what some psychologists disagree with. There are psychological studies that show cases where increasing someone’s compensation can decrease their incentive. Economists usually ignore these examples as mere anomalies, but I find them fascinating.
The idea that "no evidance has been provided to show that it plays any kind of important role" is just that nobody has been able to figure out how to pay people less (everything else constant including working conditions) while increasing their incentive to work. However, you CAN increase people’s incentive to work by making them feel like they are making a difference in the world (non-profits and gov’t often pay less money, but people still work for partly altruistic reasons – and the military relies as much on patriotism as on salaries) or by making employees feel like they are part of a community or team with social support.
-Jonathan
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