The Inner Cowen

by Don Boudreaux on September 21, 2007

in Economics

GMU economist and blogging superstar Tyler Cowen was interviewed on today’s NPR program Morning EditionListen in!

And read Tyler’s latest book, Discover Your Inner Economist.  It’s truly outstanding.

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Brad September 21, 2007 at 10:41 pm

I love the dishes story, but I have a better one… One day when we were growing up, my Dad convinced my little sister to do the dishes by promising to take her out to get ice cream. After all the dishes were done, he took her out to the garage freezer to get ice cream that out there. We still laugh hysterically at (not with) her every time someone reminds us of that.

vidyohs September 22, 2007 at 11:17 am

I hope I don't bore too many of you.

What motivates people to perform, and further, what motivates them to excell? Great topic and one on which I suspect I may be the odd man out.

I hit the ground 66 years ago and grew up country Texas, with a four year stint in country Arizona. My encultration was pure rural country and the closest I ever got to sophistication was in reading books from the library. My family and most people I knew were still recovering from the depression. So myself, and most of my peers, lived in the environment of work and chores as children. The thought of being paid to do family chores was unheard of, and allowance, forget it. We did it because it was our contribution to the welfare of the family.

Outside the family, work was usually hard, dirty, sometimes dangerous, and competitive. The biggest motivator amongst us was pride that at any size or age we were there at the beginning, held up our end during, and finished on our feet ready to go play a ball game or to head out dancing. The respect of one's peers meant a lot in that environment. The money we were paid was basically minimum wage and at that time it was 50 cents an hour.

The pride of being the producer of the money I spent meant more than the actual amount of the money.

As a young man of 17 I joined the USN and from that time until I left the service 21 years later, I did not ever volunteer nor seek in anyway overtime. Overtime was not rewarded with extra pay, one might get extra time off, but there was no system of bonus money to active duty personnel.

As a sailor I saw so many different systems and methods of motivation attempted and in my opinion consistently throughout those that were based on encouragement to perform rather than reward for performance were universal failures.

Most of you would not believe the motivation programs the military has tried only to see the entire force degenerate as a result and it is simply because the motivation was rewards based, it was encouragement based.

An example of encouragement based motivation may be something like: "The troops are becoming lackadasical in performance, so let's give them each an extra two days a month off to stimulate better performance." It never worked.

An example of rewards based motivation may have been something like: "Okay, let's survey our entire project and the standard level of performance needed from each individual during his shift. We will publish the standards expected and reward each individual with two extra days off each month if they meet those standards, and three or four if they consistently exceed them." That worked, but only if one had the discipline to not waver and reward someone who got close to but not at the standard. Rewarding non-earners was a sure way to kill the over-all program.

The prime reason I was not motivated in general by such schemes was that I valued being with my family (wife, 3 children) than I did doing extra work for extra rewards. It was my choice most of the time.

Once the children became teenagers and I had retired from the USN, I started my own business that was time and labor intensive. My prime motivator in that business was the fact that for the first time in my life I had complete control over my own destiny. The business flourished or failed on my efforts, physical and mental; and I never had to wait for a decision on what to do. My God, folks, I can not tell you adequately how wonderful that felt, even though I worked my butt off and put in long hours to see it succeed.

I stole this phrase so you'll will know that I am not above using wisdom from others: "I have been an employee and I have been an employer, and I don't like either one." My business required employees and I soon learned to detest having to employ anyone. The baby boomers and their children were generally useless. And, it only became worse as time passed by. I couldn't even find country kids that really wanted to work and give value to their employer (me).

I sold that business and became an independent contractor in various enterprises and remain independent today. No employees and no employer.

All my economics, education about capitalism/socialism, and politics are the results mostly of living and thinking about it. Logic, rational, and common sense is all I have going for me.

And, all of that tells me that money is not the best motivator at any level, and at the upper ends the money itself becomes a moot point because one already has more than one can spend. Then in my opinion the motivation, for those that still need motivation, seems to be the things that moeny can buy, the material show-off things.

As for my own kids, I raised them with the same principles that I received. They did their family chores because they were family. My boys, as soon as they could competently help me in my business, received a percentage of the day's gross. And, I guarantee you they earned it.

I am absolutely dead set against bargaining with a child on any subject. Life is going to demand things of them at some point and what they think about that will be irrelevant, life will demand it and the penalty for failure could be life changing, so children might as well get used to doing some things well no matter what they think of it in their childish little minds. To me that covered eating what they put on their plates to mowing the lawn, doing the dishes, cleaning their own rooms, and helping Dad and Mom when needed for other chores. They received praise for jobs done well, but they never received praise they didn't earn. My USN career had taught me well that unearned praise kills initiative quicker than anything. You can not buy pride or respect.

Why bust your butt to earn praise when they praise every one anyway. You get a medal, I get a medal, all God's children got a medal!
Yea for us!

You get welfare, I get welfare, all God's chillun get welfare! Yea for us!

And, officialdom wonders why kids are entering the workforce now and want all the perks and rewards first, on the promise that they will actually show up for work and produce some value. Our entire culture today from parenting to education (including TV) tells them that is the way it should be.

I ramble and maybe the horse is dead by now, poor flogged beast.

vidyohs September 22, 2007 at 11:21 am

Sorry the following paragraph should have read:

Most of you would not believe the motivation programs the military has tried only to see the entire force degenerate as a result and it is simply because the motivation was 'not' rewards based, it was encouragement based.

Brad September 22, 2007 at 4:07 pm

Vidyos, I certainly agree with the value of a strong work ethic. However, we live today in an economy where a growing number of people (often quite young) can produce great value through seemingly disproportionately small effort. There's a classic 70s era IBM study (mentioned in graduate software engineering coursework of my time) which claimed that the best programmers were 42x as productive as the average (might have been median or typical). I mention this because in a growing number of fields, there are youngsters who come out of school with fresh ideas that are more valuable than many older workers' experience, and they ought to ask for compensation and terms of employment that recognize that value. I think smaller and more entrepreneurial organizations will do a better job of optimizing contribution and compensation of such stars, but there are examples like Microsoft and now Google which have scaled nicely.

vidyohs September 22, 2007 at 10:10 pm

I can not and would not disagree with you on what you said. I recognize that. Brilliance, innovation, invention, discovery, improvement all just build one on top of the other like building blocks.

I know personally some of those young stars you speak of, and most are more motivated by ego and creative freedom than by money. I know many that pass up or quit high paid jobs in a structured environment to work at lower pay in a more open spontaneous environment so that they can turn their creativity loose and run with it, which is what most satisfies their ego.

My whole rambling post was on motivation not any of the things mentioned in the last paragraph, what motivates and plus motivates excellence?

I think this more the point of Don's blog, the question of "does money, or is money the best motivator?"

For myself, purely personal opinion, I don't believe it is, which is what I tried to say. I know for myself my personal freedom as an independent contractor or independent business man meant as much to me as any monetary reward.

I certainly will not argue against any one else's opinion here because I think each of us see motivation through individual eyes and respond in our own unique fashion.

But, as a leader, it is my experience that rewards based motivation is more successful than encouragement based motivation.

Maybe I did not make myself clear.

Rewards based motivation means one does the job well, meets or exceeds the standards set, and then receives the reward. Those who do not meet the standard receive no reward.

Encouragement based motivation means that all know the reward to be given, or already received regardless of success or failure, before any work is done at all, all in the hopes of stimulating improved performance.

I am realist enough to point out that with the baby boomers on virtually every facet of their lives they have seen encouragement based motivation systems instead of the rewards motivation system and the work force we have today reflects that.

Well, again I am whipping the horse, poor sucker got his feet in the air and tongue hanging out. Sorry.

Brad, I don't see us as disagreeing on principle or even facts, just maybe some confusion on minor details.

Brad September 23, 2007 at 7:15 am

Oh, I agree. Reward accomplishment, not effort. Encourage results, not trying hard(er). Or maybe better stated, encourage effort if that's what's lacking and having more of it would lead to better results. We're on exactly the same page here. I think I just focussed on your tangent about many young people wanting it their way and for their amount. I was talking with some friends the other day about someone we know who wants to be a medical doctor. The problem is that he's a total slacker. As a lifelong slacker myself, I know that (a) slackers don't become doctors, and (b) slackers have to find things to do and ways to do them that effectively use their talents. I found that the entrepreneurial path does it for me. I have learned the ways I can afford to fail and the ways I can't. Being able to experiment and abandon paths that aren't working or aren't interesting has been the key to my successes. Great plan for software, not a great plan for surgery. But I digress…

vidyohs September 23, 2007 at 10:11 am

Thanks Brad,
You make good points.
Can we say that some of our younger work force do eventually get over discovering that they really aren't the "most wonderfullest thing in the world" like their mommies told them and settle down to reality and do well. But, that there are many who never really recover from that shock and consequently either bounce from job to job looking to recover that feeling of "specialness", or abuse the job they have as they impose their "specialness" on their co-workers and employers.

I know, you'd ask, "well why wouldn't the employer just fire someone who abused a job?" If I could get my wife to sit down and talk to you about how large corporations have to deal with this problem she would be much better able to detail the countless examples of what I just said. Suffice it to say, it "ain't easy" to be an employer in our nation these days.

Well as I said in the beginning, this is a subject of great depth and you and I have just scratched the surface.

I am just old school enough to believe that some standards are best left in place, a standard such as the standard of self responsibility…..responsibility can't be given away. There are others that I believe should be etched in the stone of every young person's brain.

Change is inevitable, the only thing that is constant; but we humans are equipped to decide how that change affects us. Standards of behavior and character are too important to civilized societies to be changed because of the lack of parental courage or because they can be used as wedge issue to degenerate a society so a particular political view can be imposed.

It is this degenerating change in the standards of behavior and character that began with the boomers that is the reason why you and I are even discussing this issue.
Have a good weekend.

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