Motivation crowding theory

In psychology and microeconomics, Motivation Crowding Theory is the observation that, opposite the predictions of neoclassical economics, providing extrinsic incentives for certain kinds of behavior--such as promising monetary rewards--can sometimes undermine intrinsic motivation for doing that behavior and thereby lead to an overall decrease in the total amount of that behavior produced.

The term “crowding out” was coined by Bruno Frey in 1997, but the idea was first introduced into economics much earlier by Richard Titmuss, who argued in 1970 that offering financial incentives for blood donation could counterintuitively lead to a drop in the total amount of blood donated. While the empirical evidence supporting crowding out for blood donation has been mixed, there has since been a long line of psychological and economic exploration of this basic phenomenon.

The typical investigation of crowding out involves assigning subjects a task to complete either for some explicitly mentioned payment sum or for no additional payment at all. Researchers then look to either self-reported measures of motivation for completing the task, willingness to complete additional rounds of the task for no additional compensation, or both. In a classic study, for instance, Edward Deci paid all subjects for participation in a psychological experiment involving solving multiple puzzles or IQ test questions. Half of the subjects were paid a flat fee just for showing up to the experiment, but the other half of subjects were informed that they would be paid upon completion of tasks. After the presumptive experiment was over, subjects were left with free time during which they could either sit idly or complete more tasks. Deci measured the number of additional IQ questions or puzzles completed during this non-compensated time as well as self-reported measurements of interest in the task. Deci found that, compared to those who were paid simply for showing up, subjects who were paid specifically to complete the tasks were significantly less likely to complete additional non-compensated tasks and gave lower ratings of interest levels in the tasks themselves. Deci interpreted these findings to suggest that motivation for and interest in the tasks had been displaced by the provision of extrinsic incentives. Removing the extrinsic incentive, he argued, revealed diminished overall interest in the task compared to pre-payment levels.

Theoretical Development

Previous Thinking

According to research on operant conditioning and behaviorism, extrinsic rewards can increase the chances of the rewarded behavior occurring, with the greatest effect on behavior coming as the reward is given closer to the time of the behavior. In these studies, removing the reward often quickly led to a return to the pre-reward baseline frequency of the behavior. This led to popular calls for the adoption of incentives as motivational tools in a variety of professional and educational contexts. Moreover, according to standard economics, providing extrinsic incentives for a behavior has an immediate relative-price effect which should produce more of that behavior by making that behavior more attractive. Literature in economics has myriad examples of this. Thus, according to most thinking before the 1970s, offering extrinsic incentives would only promote more of the rewarded behavior.

However, some behaviors, Deci noticed in the early 1970s, appear to provide their own reward. These behaviors are said to be intrinsically motivated, and their enjoyment or rewards come from the act of performing the behavior itself. In this case, behavior does not require any extrinsic reward. These observations led researchers to ask how providing extrinsic rewards for a given activity would influence intrinsic motivation for the activity. While the relative-price effect would predict that rewards should only enhance the attractiveness of the behavior, there appeared to be indirect psychological effects of offering extrinsic incentives that, in some cases, have the opposite effect of making the behavior seem less attractive.

Experimental Manipulations

Dependent Measures

A wide range of behaviors has been investigated for crowding out, including completion of rote tasks, engagement with interesting puzzles, prosocial favors, creative art projects, and more. In almost all cases, crowding out is measured either as self-reported interest in the activity after an incentive has been provided or by measuring engagement in the activity, unbeknownst to experimental subjects, in a free-choice time period during which subjects believe the experiment has ended and after full compensation has been provided. Some investigations use both measures. In same cases (e.g. Gneezy and Rustichini 2000), crowding out has been found to directly affect effort and performance on the target behavior itself.

Independent Variables

According to a meta-analysis conducted by Deci, Koestner, and Ryan (1999), three kinds of rewards were used in the investigation of crowding out. Task-noncontingent rewards, such as show-up fees, are offered to subjects independent of task performance or completion, simply as compensation for their time. These rewards are not expected to displace intrinsic motivation. Task-contingent rewards, on the other hand, are incentives on the quantity, quality, or completion of some specific behavior (e.g. solving word puzzles or collecting charitable donations). Crowding out is thought to be most significant in this case. Finally, performance-contingent rewards, incentives for achieving certain outcomes, are thought to create comparatively little crowding out because they can serve as a signal of status and achievement rather than tampering with motivation.

Early Findings of Crowding Out

Early research in this area found that providing some extrinsic incentive--monetary, tangible, or symbolic--for completing a task could undermine intrinsic motivation and subsequent effort devoted to that task in young children, college students, and adults doing a wide range of tasks. More recent research has found that if incentives are too small then there can be short-run crowding out. However, if incentives are large then, once removed, they can have long-run crowding out effects. Research has shown that a similar effect can occur from disincentives, too. For instance, there has been work showing that increasing penalties can lower obedience with the law and decrease worker performance.

Psychological Theories Explaining Crowding Out

Various explanations have been offered for why motivational crowding occurs.

Motivational

What matters for motivation on this view--sometimes referred to as cognitive evaluation theory--is the post-behavioral significance people give to the reward. Deci and Ryan argue that rewards can be seen to have two components: one that controls people's behavior and thus infringes on their autonomy, and a different, status-signaling component that enhances people's sense of competence. If an extrinsic reward for some behavior appears to be controlling (i.e. the reason a person could plausibly be taken to have performed that behavior), this is argued to supplant intrinsic motivation for engaging in the behavior. Insofar, however, as the extrinsic incentive is seen not as an inducement but rather as a signal of high status or high achievement (i.e. a merit-based award), the incentive will engender more effort without crowding out motivation. On this account, then, the extent to which a given extrinsic incentive crowds out motivation is determined by the balance of the controlling-versus-status-signaling nature perceived by the actor.

Attributional

The application of self-perception theory to motivation suggests that people sometimes form post-behavior judgments about the causes of their actions by considering the external circumstances of their decision. While intrinsic motivation for doing the activity might be a cause, the presence of an extrinsic reward could also be sufficient for explaining a behavior. The overjustification account of motivational crowding, most prominently advanced by Lepper et al. (1973), argues that people recognize the presence of a significant extrinsic incentive, attribute their motivation for doing the rewarded activity to the reward itself, and consequently lower their feelings of intrinsic motivation toward the activity. Thus, if effort for engaging in a task becomes too onerous or if an extrinsic reward is removed, people feel less internally motivated to engage in the task compared to those who were never offered a reward for doing so.

Behavioral

Various attempts have been made by behaviorists to explain the apparent phenomenon of crowding out in terms of reward conditioning. These theories mostly reject the coherence of the concept of intrinsic motivation and instead argue that behaviors that are taken to be intrinsically motivated are instead motivated by the generalized social praise they tend to garner. Dickinson argues that part of why these behaviors are socially praised is that they are not connected with any particular reinforcers. Thus, the introduction of a specific reinforcer such as an extrinsic reward lowers the public praise. If this resultant effect is larger than the size of the specific reinforcer, she argues, then free-choice selection of that behavior will lower.

Economic Utility

Some have argued that certain utility functions can be modeled to explain crowding out. Bénabou and Tirole, for instance, have theoretically established that crowding out can reliably occur if an agent's utility function for some behavior is composed of three things: intrinsic motivation, extrinsic motivation, and image-signaling concerns. Rewards can serve as a signal in two ways, they argue: signals to actors and signals to observers.

Signals to Actors

In a context of uncertainty or information asymmetry, rewards can signal information to the actor. If the person offering the reward (the "principal") is presumed to know something more about the task than the person to engage in the activity (the "agent"), then the attachment of an extrinsic reward can be seen as distrust that the action would be taken without the inducement. On this view, offering a reward is a signal that either the principal knows the task is unpleasant and otherwise would not be completed, or that the principal does not trust that the agent to be sufficiently skilled or motivated without such incentives. On either interpretation, agents are said to infer something about the activity that lowers their willingness to engage in it without an enhancing incentive. This idea is related to what has been referred to as the "Sawyer Effect".

Signals to Observers About Actors' Motivations

Additionally, the presence or absence of extrinsic incentives can be interpreted as signals to observers of an agent's motivations for engaging in some activity. To the extent that agents are concerned with image-signaling, the presence of extrinsic incentives can lower interest in engaging in some task that might signal non-altruistic motives. Compatible with this idea are studies showing that the effect of crowding out is greater in the case when extrinsic incentives are known publicly compared to when they are known only to the actor but not observers.

Debate and Meta-Analyses

Controversy was ignited when some researchers questioned whether the data support claims that motivation crowding actually occurs. Meta-analyses revealed mixed or even null overall effects of extrinsic rewards on intrinsic motivation. Separately, though, these meta-analyses have been questioned, especially for their treatment of dependent measures and failure to account for moderating variables (e.g. kind of reward or dependent measure). Other meta-analyses have concluded that, controlling for these issues, motivation crowding for certain behaviors is a robust effect for certain kinds of rewards (typical effect sizes are in the range of d=0.3 to d=0.5).

Through the debate, consensus seems to have emerged that crowding out reliably occurs if the following conditions are met:

• Rewards are offered in the context of pre-existing intrinsic motivation (e.g. in a prosocial setting or for interesting tasks),
• Rewards are known in advance and expected,
• Rewards are tangible,
• Rewards are conditional on task engagement,
• Rewards can be interpreted by the agent and/or observers as controlling.

Applications

Volunteer firefighters serve alongside paid professionals in many communities.

People have proposed using the insights of motivational crowding theory to change reward structures at work, in schools, for policies and non-profits, and at home. The basic phenomenon of incentives undermining motivation, effort, and output has been demonstrated in populations of children, college students, and workers both in the lab and in the field. Crowding out has been shown to occur in the collection of charitable donations, IQ test questions, puzzles, teacher performance-based pay, temporary workers' effort in commision-based pay structures, charitable giving, and student scholastic performance. The sum of this evidence has led some to call for a rethinking of the way that governments and charitable organizations relying on volunteers use incentives and pay-for-performance schemes.

See also

• Motivation
• Self-determination theory
• Cognitive dissonance
• Self-perception theory