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The Unpredictable Consequences of Using Money as an Incentive

When we introduce money into the creative equation, it can have profound effects on our mindset affecting our perception of time, morality, and more.

It seems like common sense: a larger reward encourages a greater effort. So if you need to inspire a person or team to strive harder, an obvious tactic is to offer more money. Reality, however, is not that simple. 

Even the mere mention of money can be enough to change our mindset: It has the power to make us more selfish and competitive, while also putting some useful social contracts on hold. Meanwhile, large financial rewards transfer challenges that would have been pursued for passion or creativity’s sake into emotionless financial exchanges.

Let’s explore an example: Suppose you have been writing a book in your spare time. The project is a labor of love, something you’ve always wanted to do.

Now imagine that someone reads your draft when it’s halfway finished and writes you a check to finish your book. The project now becomes your full-time job. This may seem like a good thing on the surface, but it immediately changes your perspective of the work. Your principal reward is now financial. It’s something that must be done, and there are other people now relying on its outcome. Creatives who take their hobbies and side projects pro are familiar with this phenomenon.

So, what happened? The effect of monetary incentives on people’s behavior is tricky to predict and can often be counter-productive. Science has revealed some unforeseen consequences of getting cash involved, both with individuals and teams.

 The effect of monetary incentives on people’s behavior is tricky to predict and can often be counter-productive.

Money Subverts Our Morality

Consider a study published in 2000 by Uri Gneezy and Aldo Rustichini about the effects of fines on parents’ tardiness when picking up their kids from day care. The day care made a new policy that went something like this: Arrive late to take your child home, get slapped with a fee. Despite the fines, the number of parents arriving late gradually increased, in many cases doubling.

Why? The parents now knew that the fine was the worst that could happen if they arrived late. Before the fines were put in place, a desire to avoid the guilt of keeping their child and the school’s staff waiting motivated the parents to show up on time. Now, the parents were effectively paying for an afterhours service. By introducing money into the equation, the day care centers undermined an unspoken agreement built on social trust and good morals. 

Think how this same switch could impact your relationship with your work. When you slack on a passion project, the victim is your creative satisfaction, which automatically drives you back to the grindstone. After all, your creative fulfilment is sacred. By contrast, slack on a paid project and it’s tempting to see the loss only in financial, not moral, terms. It becomes a job you didn’t complete, a simple monetary transaction you choose to forgo for some downtime. 

Money Skews Our Perception of Time

In the 1970s, researcher Edward Deci had volunteers complete puzzles, but only paid some of the participants. On a later testing day, those who’d been rewarded financially were told there’d be no more payments. They and the other volunteers were then left waiting in a room with puzzles.

Those paid earlier now left the games untouched and grew bored. Meanwhile, the volunteers who had previously completed the puzzles just for the challenge spent the time happily playing more puzzles. What happened? The paid participants would have been “working for free” had they picked up a puzzle (i.e. not a good use of their free time), whereas the unpaid participants continued to see the activity as entertainment. 

Researchers have also shown that thinking about how much you earn on an hourly basis can change the way you feel about time. Sanford DeVoe and Julian House specifically showed that people prompted to think about their hourly wage were less able to enjoy downtime, such as listening to music. After all, when you make $10 an hour, two hours of music listening will “cost” you $20.

 Thinking about how much you earn on an hourly basis can change the way you feel about time.

Money Makes Us Lazy

Money gets even messier when you involve a collaborative group. In some circumstances, higher financial rewards can actually undermine team performance.

How? Imagine a team of three designers working on a new magazine. Each person conducts their research and, in turn, proposes designs for the magazine’s front cover.

Pretend you’re the client and you offer the designers a large fee dependent on good results. This is where a phenomenon known as “incentive reversal” comes into play.

The promise of that large fee convinces the first designer that she can relax a bit, confident that the other team members will pick up the slack. She thinks she can freeload on the effort they’re bound to invest to obtain that large fee. Except it doesn’t work like that. In reality, later contributors are likely to respond by slacking themselves. This is how the promise of a large team fee backfires. 

The same problem doesn’t occur if the fee is modest. Now, the first designer reasons that if she doesn’t put in a good effort, the others will probably relax, too, because it won’t be worth their time to work extra hard for a modest reward. Thinking this way, it’s not in the first designer’s interest to slack off because then the rest of the team will too, and no one wins. So the first designer works hard, and the rest follow suit. This is how a team actually ends up working harder in the context of a modest fee.

Although, the promise of a big reward hypothetically means it would have made financial sense for later contributors to compensate for the early slacker, that’s not how people actually behave. 


All this is not to suggest that money doesn’t have some real motivational benefits. After all, no one has ever paid the rent in “passion.” Rather, we should be aware that the introduction of more money is not a cure-all and can sometimes exacerbate problems instead of solving them. Treasure your passion projects and think twice before introducing money into the mix. Once money is involved, it’s nearly impossible to go back.

How about you?

How have you seen money affect your creativity?

More Posts by Christian Jarrett

Dr. Christian Jarrett seeks out exciting new research and showcases its relevance for life. A psychologist turned writer, he’s a senior editor at Aeon. His next book will be about personality change. He is @Psych_Writer on Twitter.

Comments (8)
  • Anna Van Sant

    I write jokes. I get paid per joke. When the bills are closing in I try to write more, but push and push and I just get blocked. You have to rid yourself of the monetary factor in order to become cerebrally free. Tough nut.

  • Universal_Mind

    How bout this scenario. When you “under bid a job ” as a contractor .

    You continue working on it, pissed off all the time .Vowing to never make this mistake

    again. This is how most people view money.

  • Cesar Idrobo

    Money is not the only priority for designers/creatives, but also the type of project we will be working on and who we are working with matters. Would you rather have a lot of money or grow as a professional and take on bigger challenges next time? I’d pick creative autonomy over financial gain.

  • Sarah Peterson

    Sigh. I understand the points, and agree to an extent—though that last point, with a theoretical scenario in which the words “dependent of good results” is annoying, tell me which job, freelance or otherwise, will still gain you a paycheck if your results suck?—but in an economy where we increasingly favor the shareholder over the employee, and in which CEO’s are making exponential profits while the middle class gap is widening and more and more people are seeing their pay increasingly infringed upon, this is a really frustrating article.

    I would like to see 99U posting more to encourage creatives to take a stand for fair compensation and advocating for the value of their work, not spending so much time on ideas that, while they have their time and place, are not really relevant or appropriate in our current economic culture, and within the unsettling trends we’ve seen in so many industries, including design, fashion, air travel, production, etc. (For more information on that, check out recent happenings in the airline industry with pilot contracts, runway industry (models and designers), and at Boeing plants.)

  • joannaohanlon

    I just recently began creating a lot of art pieces (as in, I thought I couldn’t draw, and in the last four months I’ve discovered I can, and I’ve made approximately 45 completed pieces). But within the first week of creating these art pieces, people started asking me if I did commissions. I started taking on these jobs, and while I enjoyed them still, they weren’t what I would’ve chosen to create, and they became something I “had to do.” I noticed my whole outlook on this newfound hobby changing fast. As a result I’ve committed to continue to balance commissions with pieces I really want to create.

    However, I do wish I were able to be more successful in selling the things I have already created for the love of the art. That would be nice.

  • Brent Hopping

    There are two differnent perspectives here. It goes without saying people need remuneratoin to live comfortably. The remuneration strategies that fuelled the behaviours that contributed significantly to the Global Financial Crisis or the collapse of Lehmans or Bearings Bank is the extreme of this. An argument could be made that former created the latter. From this perspective, this point is far from irrelevant to those who’s incomes are declining relative to the increasing cost of living.

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