Dank Pink summarizes the research that--for the vast majority of jobs--monetary incentives do not actually improve employee performance. In many cases, incentive pay actually harms employee productivity.
It's useful to keep in mind the fact that, by embracing the monetary incentive model, business interests demonstrate their utter incompetence at their own game, let alone their forays into influencing public policy. Businesses seldom have the slightest clue what is best for their own company; why should we believe that they know how to create jobs or fight poverty? This is one of the best examples of business' tendency towards ignorance of--if not outright hostility towards--evidence-based practice. And, if incentives don't even work for most types of paid employment, why do we design public policy around the idea that monetary incentives rule human behavior? 18 minutes well spent, after the jump: