Welcome to letter #12 of The Behaviorist

A newsletter that aims to make you a borderline behavioral scientist.

Each week, I drop a letter that unmasks one specific human behavior and bias to help you see how it works in your life.

The goal is to know how to outsmart others who might leverage that against you and take control.

Let’s get going.

Imagine you're at work, and your boss announces a new bonus system for completing projects early.

Sounds great, right?

You might think, "This will definitely motivate everyone to work harder and faster!"

But then something unexpected happens.

Instead of seeing a boost in productivity, you notice that some of your colleagues are cutting corners, and the quality of work starts to decline.

Newsflash - You've just witnessed the extrinsic incentive bias on display.

If this scenario feels familiar, you're not alone.

Many of us fall into the trap of believing that external rewards are the best way to motivate ourselves and others.

But is that really the case?

In this post, you'll learn:

1. What the extrinsic incentive bias is and why it occurs

2. The science behind this bias and its potential consequences

3. Real-life examples of this bias in various settings

4. Practical ways to recognize and overcome this bias in your own life and decision-making

5. Bonus - The story of Wells Fargo and how this bias backfired in their face.

Let's dive in and unpack this fascinating aspect of human behavior.

Table of Contents

• Roots of the Extrinsic Incentive Bias

  • 1. Immediate Observability

  • 2. Cultural Reinforcement

  • 3. Simplicity Appeal

  • 4. Cognitive dissonance

• Real-Life Examples of the Extrinsic Incentive Bias

• Bias Buster - Overcoming the Extrinsic Incentive B …

• Parting Words

Bias of The Week - Extrinsic Incentive Bias

In simple terms:

The extrinsic incentive bias is our tendency to assume that adding external rewards or punishments will always improve motivation and performance without actually factoring the power of our intrinsic motivation.

This bias leads us to believe that people are primarily motivated by external factors like money, grades, or recognition, rather than internal drives such as curiosity, personal growth, or enjoyment of the task itself.

Psychologists have found that this bias is deeply ingrained in our thinking.

This is possibly due to our experiences with reward systems in school, work, and society at large.

Remember the famous marshmallow experiment? (Talk about a 'sweet' deal that's hard to resist!).

Kids were offered a choice between one marshmallow now or two if they waited 15 minutes.

While this study was about delayed gratification, it also highlights our fascination with external rewards.

The study showed that children who could delay gratification tended to achieve better outcomes in various life measures, including higher SAT scores and better social skills.

Many children employed cognitive strategies to distract themselves from the temptation, such as covering their eyes or singing songs.

This highlights the role of executive functions in managing our impulses when we get distracted with short-term benefits.

But here's the kicker: numerous studies have shown that extrinsic rewards can sometimes backfire, reducing intrinsic motivation and overall performance.

For example, a classic study by Lepper, Greene, and Nisbett (1973) found that children who were rewarded for drawing with markers showed less interest in the activity later compared to those who weren't rewarded.

This phenomenon, known as the "over justification effect," suggests that external rewards can undermine our natural enjoyment of activities we once found intrinsically rewarding.

It's like paying your kid to read books – it might work in the short term, but it could kill their love for reading in the long run.

Roots of the Extrinsic Incentive Bias

Let's break down why we're so prone to this bias:

1. Immediate Observability

External rewards yield quick and visible results, making their effects more apparent than those of intrinsic motivation.

This immediacy can lead us and even organizations to favor extrinsic incentives, as they are easier to measure and assess, compared to the more subtle and long-term benefits of intrinsic motivation.

2. Cultural Reinforcement

We live in a culture that emphasizes external markers of success, such as wealth, academic grades, and prestigious titles.

This makes it even harder for us to actually pick something out of our own internal desires.

3. Simplicity Appeal

Implementing and measuring external reward systems is generally simpler than nurturing intrinsic motivation.

After all. organizations tend to prefer straightforward incentive structures that can be easily quantified for a reason.

This makes whatever external recognition or rewards more appealing despite their potential drawbacks in fostering long-term engagement and satisfaction.

The irony is that we already know that, but due to how life has evolved and the comparison traps laid all over social media, we just accepted and normalized it.

4. Cognitive dissonance

It occurs when we experience discomfort from holding conflicting beliefs or attitudes.

To resolve this discomfort, we may downplay the significance of intrinsic motivations in others while emphasizing their own intrinsic drives.

This self-serving bias allows us to maintain a positive self-image, which leads us to assume that others are primarily motivated by external factors.

Real-Life Examples of the Extrinsic Incentive Bias

1. In Education

Many schools rely heavily on grades and test scores as motivators, assuming these external measures will drive student learning.

However, this approach can lead to students focusing on grades rather than genuine understanding or love for the subject. (The story of most of us).

2. In the Workplace

As stated earlier, companies often implement bonus structures or employee-of-the-month programs, believing these will boost productivity and morale.

While these can work in the short term, they may inadvertently create a culture where employees only put in extra effort when there's a tangible reward.

3. In Parenting

Parents might use reward charts or allowances tied to chores, assuming this will motivate their children to behave well or contribute to household tasks.

However, this can sometimes backfire, making children less likely to help out unless there's a reward involved.

4. In Personal Development

We often set extrinsic goals like "lose 20 pounds to look good at the beach" rather than intrinsic ones like "adopt a healthier lifestyle because it makes me feel good."

The former might lead to short-term results, but the latter is more likely to create lasting change.

5. Politics

Politicians often assume that voters are primarily motivated by tangible benefits like tax cuts or financial incentives.

This can lead to campaign strategies that focus heavily on economic rewards rather than addressing intrinsic values such as community well-being or civic duty.

For instance, a candidate might promise economic incentives for businesses without emphasizing the importance of social equity or environmental sustainability.

Another cousin to this is the perception of politicians.

In other words, you may view politicians as primarily motivated by power and financial gain. (Not wrong there for the most part).

But, this perception can overshadow the intrinsic motivations of public service and dedication to societal improvement that many politicians hold.

This bias can lead to disillusionment with political figures, as constituents may fail to recognize the complexities of their motivations.

6. Media

The media often highlights the financial contributions of wealthy individuals to charitable causes.

They tend to frame their actions as primarily motivated by tax benefits or public recognition.

This focus on extrinsic rewards can obscure the genuine altruism and intrinsic satisfaction that drives many philanthropists to give back to their communities.

The same goes for celebrities or influencers who endorse certain products and many of us label them as beneficiaries and inauthentic.

This can be true for some, but not necessarily for all of them.

Bias Buster - Overcoming the Extrinsic Incentive Bias

1. Recognize Intrinsic Motivators

Take time to identify what truly drives you and others beyond external rewards.

What activities do you enjoy for their own sake?

Understanding these intrinsic motivators can help you tap into more sustainable sources of motivation.

Try this: Make a list of activities you do purely for enjoyment, without any external reward. 
Reflect on why you find these fulfilling.

2. Reframe Rewards

Instead of focusing solely on external rewards, try to connect tasks to personal values or long-term goals.

For example, rather than motivating yourself to exercise with the promise of a treat, focus on how it makes you feel energized and healthy.

3. Foster Autonomy

Giving people (including yourself) more control over how they approach tasks can boost intrinsic motivation.

In a work setting, this might mean allowing your team members to choose their projects or set their own deadlines when possible reasonably.

4. Use Feedback, Not Just Rewards

If you work alone or with others, feedback is essential in any setting.

Provide specific constructive feedback that acknowledges your effort and progress. See what you did and how did you perform.

Have you managed to achieve the goal or task because you were incentivized internally or externally?

This awareness can help you shift your focus to do things for something deeper as the primary driver and rewards as a byproduct.

5. Empathy can be helpful

I know its hard to do so because we are fast to judgement, but consider what motivates others by reflecting on your own motivations.

Acknowledge that while you may be driven by intrinsic factors, others might share similar internal drives.

This perspective can help foster a more nuanced understanding of motivation in others.

6. Educate about motivation.

This is more applicable in the work culture.

Its a good idea here to provide training or resources that highlight the interplay between intrinsic and extrinsic motivations.

Understanding that motivation is multifaceted can help reduce the bias in how your team or org perceive their own and others' motivations.

Parting Words

No better way to end the topic than with a lesson or insightful thought.

Until next time, stay motivated.

Leo