Incentives do not rule

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:

OECD report confirms that inequality does not incentivize upward mobility

Image: OECD member nations (blue). (source)


Defenses of inequality always invoke the same claim: high inequality makes for a strong economy. With (in theory) no ceiling and a very low floor, the rewards for success are extremely high, and the punishment for failure is extreme. This makes Americans hungry for success, and hard working citizens makes for a strong economy. We work harder than the Japanese, put in more hours than the Italians, study harder than the French, and sacrifice more than the Finns because our incentives encourage workers to do so. Nothing motivates like huge rewards for success--and a free fall into abject poverty if you fail. Incentives rule. People respond to incentives, and our incentives align to maximize economic growth. Another way of saying this is that we should value equality of opportunity and inequality of outcomes.
 
A recent OECD study shakes this logic to its very foundations. Researchers tested a sample of workers in each participating country in literacy, math, and problem solving with information technology. The United States performed abysmally: