Money can be WEIRDly motivating

Employers seeking to make their staff work harder have a couple of main strategies available to them. One is to offer performance-related pay incentives. The other is to use psychological techniques, such as offering more praise, or encouraging workers to feel that high productivity is expected — that it's the norm.

Research shows that both can motivate people and improve their performance, but the latest, large-scale experiments have suggested that monetary incentives are much more effective, note the authors of a recent paper in Nature Human Behaviour. However, write Danila Medvedev and colleagues, the participants in these studies were almost entirely from the US. "Can managers and policymakers in India, Indonesia or Nigeria apply scientific insights from these studies to issues facing their own countries?" the team wondered.

To find out, they re-analysed some existing data and also ran a series of online studies on a total of more than 8,000 participants from two WEIRD societies — the UK and the US — and five non-WEIRD nations: China, India, Mexico and South Africa.

In the first set of studies, participants from the UK, China, US, Mexico, and South Africa were shown a series of images, one by one, and asked to identify any that contained a building. The maximum time that they could spend on this was ten minutes.

All of the participants were told that after completing ten images, they would be entitled to a flat base fee. However, one group also received a type of psychological intervention — such as being told being told that most people perform well on this task, which made it clear that hard work is the norm. Another group of participants — those in the 'monetary condition' — instead received a financial incentive to work harder, in the form of an additional 'piece rate' bonus of between five and nine cents for each extra set of ten images that they assessed.

In each of these studies, the team directly compared participants from one WEIRD country — either the UK or the US — with participants in at least one non-WEIRD country. When they analysed the data, the pattern of findings was clear. Time and again, additional monetary incentives were more effective than psychological methods at getting WEIRD vs non-WEIRD participants to work harder.

In a study that compared participants from the UK and China, for example, the team found that, in China, bonus payments increased effort by 19.0%, while in the UK, the effect of bonus payments was more than five times bigger, increasing effort by 109.5%.  

In one of the other studies, on participants in Mexico and the US, the team found that offering bonuses was not as clearly superior to a psychological norm incentive at encouraging Mexican, compared with American, participants to work harder.

In fact, when the team analysed the amount of effort per dollar spent for each of the conditions, they found that for Mexico (as for China, in fact), the monetary condition was less cost-effective than the norm condition. Another striking finding from this particular study was that as soon as the participants became entitled to their base pay — so, when there was no financial incentive to continue — over half of the American participants quit the task but over 90% of the Mexican participants continued with it.

A further experiment revealed that even a tiny bonus scheme (just one penny for every 20 images assessed), when compared with a social norm incentive, increased effort by 48.1% in the US, but only 1.6% in India. The team's analysis led them to conclude that while offering additional piece-rate payments, rather than a psychological incentive, was cost-effective in the US, in India, it was not.  

In a final study, the researchers recruited more than 2,000 bilingual Hindi- and English-speakers in India to complete the same task. Again, one group was offered extra monetary rewards, while another received a psychological, social norm incentive. But while some were given the task in Hindi, others were given it in English. The analysis showed that the money advantage over the psychological incentive was bigger when the task was taken in English. In this study, the participants were also asked how they felt about the task. Those who did it in English were more likely to say that they did it only for money.

The team suggests that because non-WEIRD cultures tend to be more collectivist — more likely, as they note, to value duties and responsibilities to the people around them — this might help to explain their results.

They also acknowledge a few limitations to the work, including the assumption in their analyses that psychological incentives to work harder carry no cost. In the real world, some employees exposed to strong expectations to work harder may become more stressed, more sick, and less productive.

However, the findings are, the team writes, another reminder to avoid extrapolating conclusions from studies on the small minority of the global population that live in WEIRD cultures to the rest of the world. And the overall message is clear: "monetary - relative to psychological - incentives may increase effort less in non-WEIRD cultures." However, they also stress that this data should not be used to justify paying people in non-WEIRD cultures less. "Non-monetary incentives cannot and should not be seen as a substitute for paying a fair wage."

Read the paper in full:
Medvedev, D., Davenport, D., Talhelm, T., & Li, Y. (2024). The motivating effect of monetary over psychological incentives is stronger in WEIRD cultures. Nature Human Behaviour, 1–15. https://doi.org/10.1038/s41562-023-01769-5

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