We all know that incentives matter. Any standard economic textbook will tell you that changes in the costs or benefits of doing something can significantly change behaviour. Any budding psychologist will no doubt wax lyrical about various lab experiments involving rats. Managers, parents and even dog owners will be able to tell you how they have used rewards to encourage good behaviours to motivate their teams, children and pets. There’s a good reason for this. Rewards help to activate special pathways in our brain, which not only make us feel good but encourage us to seek out further rewards.
But perhaps to an even greater extent than with any other part of the think small framework, the details of how to use rewards to achieve your goals and to motivate others are less clear cut. What seems to work in some situations doesn’t always translate into others. For example, many parents will have used rewards with their kids as they grow up – from smiley faces and gold stars to help potty train toddlers, to ice cream and extra time watching TV to incentivize them to do their homework. Those of you with older children, though, may recognize that things can become a bit more complicated as your children grow up. You may have wondered what types of rewards would be appropriate, for example, to encourage your teenage children to study hard at school in the run-up to important exams. You may even have wondered whether it’s appropriate to reward (or bribe!) your children at all for things you feel they should be doing anyway.
Parents aren’t the only ones pondering these types of questions. Many teachers, head teachers, academics and policy makers have wrestled with how best to encourage kids to improve their grades. That’s why the work of people like Simon Burgess, a Professor of Economics at the University of Bristol, is so important. Burgess and his team of researchers have been running numerous studies in schools across England.1 One of the largest looks at whether providing pupils with rewards can help to increase effort and engagement and ultimately the grades they achieve. Covering sixty-three schools and some 10,000 pupils in the final year of their GCSE exams, Burgess’s team divided the schools into three distinct groups. The first group acted as the control – none of their pupils would get any rewards. The second group of schools were given financial rewards. These rewards were based on their attendance, behaviour, classwork and homework over four separate periods of five weeks. The incentives were pretty big for fifteen and sixteen year olds: you could get up to £80 for each of the five week periods, or £320 overall. The third group got a different kind of reward. These pupils were instead offered the chance to attend events that were chosen by student representatives. They could win tickets during each of the five week periods that would enable them to go to up to two events during the year – making them much less costly overall than the cash rewards. The events included trips to Wembley (home of the England football team), the Houses of Parliament and theme parks.
Before we reveal the results, try putting yourself in the shoes of the teachers and parents of these sixteen year olds. Have a think about whether you would be inclined to support a school that set up an incentive programme of this kind, or whether you’d be inclined to use one at home to motivate your child. What happened in practice demonstrated the importance of the small details of the incentives programme. It turned out that their impact depended on the circumstances of the pupils. The rewards had next to no impact on those pupils who were already expected to do well. It seemed that these pupils didn’t need an extra incentive. They were already motivated to perform. But for around half of the pupils, the effects of both the financial and the non-financial rewards were substantial (with slightly bigger effects for the more costly cash rewards). The effects were especially big for those from lower income groups. For maths and science GCSEs, the incentives eliminated about half of the difference you would have expected to see between pupils eligible for free school meals and the other pupils, and was particularly effective at improving the grades of those expected to do less well.
This study might feel like an interesting diversion into the minds of teachers, parents and teenagers in the run-up to an important set of exams. But the results provide us with important lessons into some of the very real challenges in using rewards to motivate behaviour. Top of this list is the concern that financial rewards can ‘crowd out’ intrinsic motivation. Lots of studies, some of which we will examine in this chapter, have documented how paying people to do things that they are already motivated to do can backfire. As we will see, and as Burgess’s study neatly shows, it’s not that financial incentives in general don’t work. Far from it. It’s that financial incentives need to be properly targeted, so that they provide a sufficiently meaningful incentive to the individual receiving them in the context in which they are given. An £80 reward to a pupil who doesn’t respond to an incentive to work hard at school might work well in a completely different setting. It will also mean giving thought to how an incentive is structured and framed. Should you reward the ultimate goal (grades), or behaviours that help you or others get there (attendance, behaviour and homework), and should you use monetary or non-monetary rewards? And if you decide to use financial incentives, you may want to consider whether to frame a reward as ‘gaining’ £80, or setting £80 aside and taking it away from the person who fails to achieve the objective in question. These are identical rewards, but bite in very different ways.
So it’s clear that how we design and set a reward mechanism is of crucial importance to how effective it is likely to be at encouraging us to achieve our goals. And here, more than ever, the details that matter. We will outline two different but complementary ways of using rewards – one focused on achieving the overall objective and the other on rewarding the behaviours that will help you get there. We will also highlight the potential pitfalls to avoid when using rewards. So, the three lessons for setting rewards to encourage you to achieve your goals are:
Put something meaningful at stake. Link achieving your ultimate goal to a significant reward, and make it binding and enforceable.
Use small rewards to build good habits. Motivate yourself or others along the way by using smaller incentives linked to specific steps needed to achieve the overarching goal.
Beware of backfire effects. Financial incentives can ‘crowd out’ your intrinsic motivations, so be careful that rewards (or penalties) don’t undermine good intentions. You can do this by using different types of non-financial rewards.
Rule 1: Put something meaningful at stake
Dean Karlan is a Professor of Economics at Yale University, and one of our favourite behavioural scientists. This is because his studies not only reveal important insights into human behaviour, but demonstrate how they can be applied to achieving goals in real world settings. One of the most interesting of these studies, conducted with fellow behavioural scientists Jonathan Zinman and Xavier Giné from the World Bank, focuses on how financial incentives can be used to help achieve their personal goals and what some of the conditions might be to help make them effective.2 In partnership with the Green Bank in the Philippines, they sought to test the effectiveness of getting smokers to put something at stake to help them quit smoking. After identifying a group of smokers who wanted to quit, the team randomly assigned some of them to a group who would be given the opportunity to open a bank account into which they would deposit money that would be forfeited if they failed to stop smoking. They called the programme ‘Committed Action to Reduce and End Smoking’ (CARES).
The CARES clients got to choose how much of their own money to put at stake, but they were encouraged to use the money they would normally have spent on cigarettes into the bank account. The average client made a deposit every two weeks and ended up committing 550 pesos (US $11) by the end of the six-month contract period. This was about 20 per cent of their monthly income, so these were big sums. There was another important feature of the accounts. The smokers who signed up for the CARES accounts were free to choose whether or not they wanted to take up the programme. But once they had decided to do so, they were required to sign binding contracts that would prevent them from backing out. Green Bank technicians were trained to test, using urine strips, whether anyone had been secretly taking a drag in between making deposits. Only a zero result counted as passing and if they failed to pass the urine test, all the money they had accumulated in their CARES accounts would be given to charity. In other words they’d lose up to six months of hard-earned cash for a single cigarette. If they passed, though, the successful quitters would get a nice windfall – and to top it all, they would have not been smoking for so long that they would be unlikely to have a craving to spend the cash on cigarettes.
Now, nicotine is an addictive substance, so if reward schemes like this can be shown to work in helping people quit smoking, we can be fairly confident that they can help us to achieve other kinds of goals too. And the scheme was effective. Very effective. Participants in the programme who had taken up the CARES accounts were more than 30 per cent more likely to pass the nicotine test than their compatriots who did not. Better still, the effects were long lasting. After twelve months, Karlan, Zinman and Giné conducted some surprise tests on the original participants and found that the CARES account holders were still much more likely not to be smoking than those who hadn’t had the accounts.3
Before we all go charging off to set up for ourselves extravagant reward systems to help us achieve our goals, it may not surprise you to learn that the details matter. The good news is that there are four relatively straightforward lessons that will help you to set yourself an effective reward mechanism. The first of these is that you need to make sure that there is a straight line between the reward you set yourself and your overarching goal. In other words, your reward should only pay out when you’ve achieved your ultimate objective. The easiest way of doing this is to link your reward to the commitment you made in the previous chapter – your commitment should state what it is that you are committing to achieving and when. So if you want to lose weight, make sure that your reward pays out when you have reached the weight you have pledged to meet – no prizes for nearly getting there (though in the next section, we will see how we can build smaller reward mechanisms into our goal achievement on an ongoing basis – something which was present in the GCSE rewards study)!
The second, related element is that it needs to be a meaningful reward. No small trinkets for achieving your headline objective. As a group of behavioural scientists who have studied the effects of incentives upon people’s behaviour have persuasively argued: ‘Pay enough or don’t pay at all’.4 Indeed, Karlan himself understood this lesson when setting himself a personal goal for losing weight. After finishing his doctoral thesis, he and a friend decided that, if either of them failed to meet their weight-loss target they’d have to give the other half of their annual income! He decided to put a large sum of money at play not because he was a reckless gambler, but because he wanted to ensure that it would bite whenever he had the urge to head to the freezer for a tub of ice cream. Now, we don’t think it’s necessary or appropriate to put half your salary on the line if you are going to set yourself an incentive of this kind, but the broad point remains – that if you are going to use a financial reward, it has to be meaningful in the context in which it is set to be effective. A quick word of warning before we move on: do not assume that these rewards need to be financial. In the final section of this chapter we will explore in detail how and why financial incentives can backfire, and what some alternatives to cold, hard cash might be. But for now, it’s enough to say that if you don’t much care for the prize you have set yourself, it’s unlikely to be a great source of motivation.
The third feature of a good reward is that it needs to be binding. You need to be certain that, if you succeed, it will pay out. This was the lesson Karlan learnt when setting his own weight-loss reward scheme. Karlan discovered that it was easy for him and his friend to rewrite the rules after they’d failed to start losing weight, especially as they had set the bar so high at half their salaries. They both realized that for their incentive to be effective, it would need to be binding. So they drew up a contract, which stated that any attempt by either of them to renegotiate the terms of the contract would result in immediate failure. In short, they’d have to pay up, and there would be no way of backing out of the arrangement. Karlan puts great store by this particular aspect of his scheme, which helped them both shed the pounds. In the quit-smoking accounts in the Philippines, no one was left in any doubt that the contracts were binding – their money was being held by the bank and everyone was clear that if they failed to pass a urine test, it would be forfeited. And in the school exam scheme, everyone participating had faith that the schools would pay out once it was in place.
If you want to make your reward binding, the best and simplest way of doing so is to call on the services of your commitment referee. In the ‘Commit’ chapter, we saw how Rory asked Owain to act as his commitment referee to help him exercise more. One of Owain’s key roles was to help Rory set the terms of his reward (or in this case his penalty: wearing an Arsenal shirt if he failed to meet his exercise goals) and it was Owain’s job to determine whether or not Rory had failed to meet his goal and warranted being punished. So, when you are setting yourself a reward, do it in partnership with your commitment referee and ask them to enforce the terms of your binding commitment, which will include determining whether or not you deserve the rewards you have set yourself.
The fourth and final aspect of a good incentive is much more subtle and goes to the heart of one of the most celebrated findings in the behavioural science literature. It is that human beings care much more about losing something than they do about gaining something of an equivalent size.5 There’s a really simple way of testing yourself when it comes to what is referred to as ‘loss aversion’. Think about how you would feel if you were walking along the street and you found a crisp £20 note lying on the floor. There’s no way of returning it to its rightful owner, so you put it in your pocket, feeling pretty happy about just having unexpectedly acquired a small windfall. Now think about how you would feel if you went out for the day and popped into a local shop to buy something, reached for your wallet and discovered that you’d lost £20. It was there earlier that day, but it’s gone now. How much worse does this loss feel than the equivalent gain of £20 in the previous example? Most people would say that it feels much worse. Experiments have repeatedly shown that losses hurt us about twice as much as equivalent gains, and that we ascribe most value to things we already possess (something which behavioural scientists call the ‘endowment effect’6). That’s why, when you are setting your reward structure, you should think about how you can do so in a way that taps into loss aversion to maximize the power of the effect. This is why, in the GCSE exam study, the cash and the tickets were pre-loaded into pupils’ accounts so that failure to show the requisite effort would result in their loss. And it’s why, in the smoking cessation bank accounts, you locked away your money and then lost it if you failed to quit smoking. This was a greater motivator for people than thinking about the windfall at the end of the six-month programme. So when you are setting your reward, think about how you can put something at stake that results in you losing something if you fail.
We hope to have demonstrated not only that rewards can be a powerful tool for achieving your overall goal, but also the details in how you set your incentives are incredibly important and tricky to get right. If you follow these four simple elements – link the reward to your ultimate objective; make it meaningful; make it binding; and use loss aversion – your reward will likely spur you to your goal more quickly. This section has been about your overarching objective – the final goal you want to meet. In the next section, we will look at how we can build smaller rewards into each of the ‘chunks’ of the activities that ultimately lead to our goal.
Rule 2: Use small rewards to build good habits
Timboon is a small town in Victoria, Australia, not that far from Melbourne. Timboon suffers from a problem it shares with towns across Australia and throughout the Western world: its citizens are getting fatter. They’re also becoming less active than they once were. It was for this reason that the Behavioural Insights Team partnered with VicHealth, the organization tasked with promoting the good health of people in the Australian state of Victoria, to understand what could be done to help reduce obesity in the region. Through this partnership, we teamed up with Timboon and District Healthcare Services to see if we could increase levels of physical activity in the town. Being the kind of organization that likes to live by its own principles, Timboon and District Healthcare Services suggested that we start with its own staff – part of a growing recognition among employers that physical activity is a key driver of their staff’s wellbeing. They already had a promising workplace health initiative, in which staff were given Fitbit devices and encouraged to hit 10,000 steps a day. But the data showed that, while there were decent levels of engagement, the number of steps, and of calories that people were burning, was starting to drop. So Alex Gyani, a senior member of the Behavioural Insights Team's Australian office, started a project with Tania Leishman, the Timboon Health Promotion Officer, to see if they could help encourage people to make more sustained changes in their behaviour. They knew that using big rewards could help staff achieve a longer-term objective, but they were also aware that smaller, more frequent rewards can be just as powerful at helping to build up daily habits.
So Alex and Tania decided to put this idea into action. They wanted a reward that was appealing enough to help kick-start the motivation of staff. But it had to be affordable for the organization. In the end they agreed on something that went with the grain of the programme, while also giving people a luxurious treat: a $50 massage voucher if the whole team walked an additional 2,500 steps per day (compared to their historical average) on five out of seven days of the week. In this way, the rewards were specifically focused on encouraging each person to walk a little more each day, rather than on a generic target of 10,000 steps a day, which some people were already meeting. Crucially they were also focused on rewarding daily behaviours and prompting staff to help encourage each other.
After the programme was put in place, Alex and Tania stepped back and waited for the data to come in. This showed that the reward scheme had a big effect, increasing the number of steps people were taking by over 2,100 every week and significantly increasing the calories they burnt through the week. Best of all, it seemed to have the greatest effect on those who needed it most: less physically active people were the ones who showed the biggest weekly improvements.
In the previous section, we saw how rewards can be really effective at helping us to stay on track with our headline objective. The rewards in these instances need to be sufficiently large to keep you motivated over a long period of time. But the Timboon scheme illustrates a different principle and supports another core tenet of the thinking small approach. Alongside your ultimate goal, you will have broken your goal down into a set of smaller ‘chunks’. And it can be helpful to set yourself smaller rewards that are linked to each of these chunks, all the while ensuring, of course, that these separate activities are connected to achieving your ultimate goal. The chunks or activities that you reward can become more stretching over time (this is known as ‘shaping’). For example, if you want to encourage your child to clean their room, you may want to first reward them for cleaning up one toy, the next time for cleaning up five toys, and so on. The great thing about these kinds of rewards, all of which should be small ‘well dones’ rather than big windfalls, is that they can help you to build up habitual behaviours, linked to your daily routine (the subject of the ‘Plan’ chapter). Such rewards are likely to be most helpful in those day-to-day situations when you know you probably should be doing something, but are struggling to get around to it. The reward in these instances can provide you with that little extra bit of a reason for following through, particularly if you felt the need to give yourself an additional incentive to get things moving in the first place.
These kinds of smaller, more regular rewards have been studied in one of the trickiest areas of behavioural change: trying to get kids to eat more fruit and vegetables. As any parent knows, this is a far from straightforward task, so numerous researchers have sought to discover what kinds of things might motivate children to eat more healthily. In one of the biggest studies of its kind, a group of researchers took on the challenge of devising new ways of encouraging thousands of children across forty elementary schools in Utah to eat more healthily. They wanted to see whether small rewards would help encourage children to eat more fruit and vegetables. Not just once or twice. But as a choice they would actively make in the future by turning their fruit and vegetable choices into long-term habits. The idea was a simple one. Whenever a pupil ate at least one serving of fruit or vegetables, they would receive a small reward in the form of a special token. The tokens had a real value (25 cents), but could only be redeemed in the school store, school carnival or book fair, so as to avoid any of the rewards for healthy eating being spent on cakes and chocolate. The researchers decided to run two variants of the programme: in some schools, the daily rewards were given for three weeks, and then stopped; in other schools, the rewards were offered for a total of five weeks.7
Before the study was run, it was far from clear how well the small reward scheme would work. It is notoriously difficult to get children to eat broccoli and peas when pizza and chips are available. But the rewards turned out to be incredibly effective. They led to a doubling in the number of children eating at least one serving of fruit and vegetables every day. Intriguingly, though, this wasn’t the main point of this particular study. The main question was what would happen after the incentives were removed. As we saw in the ‘Plan’ chapter, repeating the same actions (asking for a portion of fruit or vegetables with your lunch) in response to the same cues (standing in line and being asked what you want to eat) helps to create habits that will over time make it easier to achieve your goal. This was one of the reasons that the researchers chose to run the programme for different lengths of time – to see whether a longer period of rewards (five weeks) might help to sustain the eating habits to a greater extent than the shorter programme (three weeks). So when the researchers went back two months later they were delighted to find that both the short and the long programme had strong, sustained effects. The effects of the five-week programme, however, were much more impressive. Kids who’d received the rewards over a longer period were seeing increases in fruit and vegetable consumption that were twice as big as those in the shorter programme. It seemed that the repetition of the scheme over a longer period of time in the five-week scheme had helped to ingrain these habits more deeply. This reinforces evidence that using more rewards over a longer period of time will increase the likelihood that the behaviour will be sustained after the rewards stop.
The rewards at the heart of this schools eating programme were given out whenever the kids had eaten sufficient quantities of fruit and vegetables. But one of the other features of many small reward programmes, including the one we put in place in Timboon, was that there was an element of competition about it. In fact, any scheme that encourages groups of people to collect rewards over an extended period of time is ripe for introducing some form of competition. ‘Gamifying’ your goal in this way through rewards and competition is being looked at seriously not only by app developers, but policymakers and companies around the world. We think that there is huge potential for gamifying your goal, whether it’s a personal or a work-related challenge you’re seeking to achieve.
Let’s look at what happened, for example, when some of the core tenets of the Utah school study were tried in English schools, but with a stronger focus on competition and ‘gamification’. In this study, kids received stickers rather than tokens for choosing fruit and vegetables at lunchtime. At the end of the week, pupils who’d gained at least four stickers could choose a small reward (such as a toy) from a special box. The researchers found that these small rewards helped to encourage the children to eat more fruit and vegetables, as it did in the Utah study. But when they introduced an element of competition – by placing the kids in groups of four and allowing only those with the highest numbers of stickers to choose a reward – it increased fruit and vegetable consumption by three times as much.8
So if you can, when you are setting your own goal, or if you are designing a reward programme to motivate other people, think about how you can gamify the goal, by linking the achieving of ‘chunks’ to rewards and then getting people and teams to compete against each other. These smaller rewards along the way will help you build up good habits.
The first two sections of this chapter have been about how we can put in place rewards to motivate us. But we haven’t yet fully explored some of the complexities in using rewards, including how they can backfire if you set them incorrectly; the subject of the final section.
Rule 3: Beware of backfire effects
In the early 1990s, the Swiss government was intending to build two repositories to store nuclear waste. Two communities, located in central Switzerland, had been designated as potential sites. As might have been expected, it was an issue about which Swiss citizens, used to participating in referenda on questions of local importance, had strong views. This gave two academics, Bruno Frey and Felix Oberholzer-Gee, an idea for an intriguing research project. They contacted two-thirds of the households in the affected areas and asked the local residents whether they would be willing to permit the construction of a nuclear waste repository in their community. To the surprise of many at the time, just over half of the respondents said yes. This despite the fact that many of them were genuinely concerned about the potential negative consequences. Nearly 40 per cent of all respondents, for example, believed that there were considerable risks of serious accidents – not something that you’d want to happen anywhere near your home.9 The residents, though, seemed to recognize that the facilities would have to go somewhere, and that alongside the concerns they had over potential accidents they also had civic duties as Swiss citizens.
Frey and Oberholzer-Gee then asked a slightly different set of questions. They wanted to know how many people would be willing to accept the waste facilities if they were also offered financial compensation. The compensation varied from $2,175 to $6,525 per individual, per year. With this payment added to their sense of civic duty, you might have thought that the citizens now had even more reason to say yes. They were being offered money to add to their underlying motivations. But while over 50 per cent of the respondents said yes without any cash incentive, when the compensation was offered, the acceptance levels plummeted. Suddenly only a quarter of respondents were prepared to accept the facilities. And just as interestingly, the amount of money – whether it was just over $2,000 or more than $6,000 – didn’t have any bearing on people’s views.
What was going on? Far from supplementing the residents’ intrinsic motivation, it seemed that the offer of cash had turned what was previously a moral duty into a financial transaction. And the money on offer, even at $6,000, wasn’t high enough to compensate for the perceived risks. Findings like these have often puzzled classical economists, who might assume that offering an additional payment would only have the effect of increasing the benefits to the individual and therefore increasing the positive response rates. But behavioural scientists no longer find these results particularly surprising. There are now hundreds of illustrations of this phenomenon, but again the context and details are important. For example, Richard Titmuss’s work famously indicated that paying people to donate blood would negatively effect their willingness to do so. But more recent work by Bob Slonim challenges this assumption. His experiments indicate that the way these rewards are framed is important, and well-designed incentive schemes can in fact increase donation rates.10 In short, putting up a monetary reward for your goal, which you should have intrinsic motivation to achieve anyway, may not always be a good idea and could even undermine your efforts if not designed carefully.
One of the most famous experiments that shows how easy it is for financial incentives to backfire was conducted by Uri Gneezy in Israel, where ‘donation days’ take place every year. Each of these days is devoted to a particular society that collects donations from the public for a charitable cause – like cancer research or helping disadvantaged children. In what is a well-established practice, high-school students go in pairs from door to door to collect the donations. What Gneezy wanted to know was whether or not these students would collect more money when they themselves had a financial incentive to go alongside their underlying motivations to help these good causes. So he set up a trial in which the high-school students were split into three very different groups. The students in the first group were given a speech in which they were told about the importance of the donations they were about to collect. They were also told that the results would be published, so that the amount collected by each pair would become public knowledge. The second group were given the same speech, but they were also given a small incentive: each pair would get to keep 1 per cent of the total amount they collected. The third group were given a much larger incentive of 10 per cent.
So what do you think happened? Well, the biggest collections were made by those who received no financial incentive, closely followed by the group with the large incentive of 10 per cent. But the group that were given the speech together with a small incentive collected a far smaller amount of money – 36 per cent less. Collecting money for charity has an intrinsic motivation for people, so the introduction of a small monetary reward displaced this with an extrinsic reward, which was far less powerful than the pull of helping out a good cause. Just like in Switzerland, it seemed that far from helping to motivate people, the incentive had put people off. It had displaced the students’ intrinsic motivation.
Before we move on, we should be mindful of the central message here, which many commentators misinterpret to mean that financial incentives do not work. This is how many people misrepresent perhaps the most celebrated study that’s been conducted in this area, which looked at what happened when parents started being fined for turning up late to pick up their kids from childcare. The study, also conducted by Uri Gneezy and Aldo Rustichini, famously showed that the fines backfired: they doubled the number of parents who turned up late, for the same reason that Swiss citizens didn’t want to be paid to host nuclear facilities.11 In this case, the moral duty of turning up on time to support the hard-working childcare assistants had been turned into a financial transaction. Suddenly it was OK to turn up late – the fine had replaced the moral obligation. But Gneezy and Rustichini’s broader point was not that fines do not work. It was that, if you are going to use a financial reward or penalty, you need to think hard about the level at which to set the price, especially when people already have an intrinsic motivation to ‘do the right thing’. So this is why, in the first section of this chapter, we emphasized that whatever you put at stake has to be sufficiently large to bite. So if you are going to use financial incentives, make them meaningful. Of course if you set the reward too high it may not be cost effective, or worse, it may even encourage cheating, dishonesty or reduce performance.11
An alternative approach, which we think is likely to be more appropriate for most people setting a goal which they should already have an intrinsic motivation to achieve, is to avoid using straight, cash rewards. In line with the broader think small principles, we have devised three different ways in which you can do this. The first is to reframe the cash reward so that it is focused not on the money, but on the thing that is being purchased. This is what some clever researchers effectively did in a scheme designed to incentivize Singaporean taxi drivers to exercise more. Some people were offered a $100 cash reward, but this was far less effective than the alternative reward of paying for the driver’s taxi lease for a day.12 Why should we be surprised by this? Well, the cost of the lease was $100 a day. To apply this to your own goal, focus on the things that you would really like to do to celebrate achieving your ultimate objective. But instead of setting a cash reward for yourself, focus on the thing that your cash will buy you. It might be a holiday that you’ve always intended to go on. It could involve throwing the mother of all parties. Or it might be treating yourself to a season pass to a cinema, or your favourite sports team. When you are thinking about what this reward should be, keep in mind the lessons from the ‘Set’ chapter: that buying ‘experiences’ rather than physical products, extending social relationships, and giving time and money to others are all more likely to improve your wellbeing than physical products. Studies have shown, for example, that employees who had donations made to a charity on their behalf were happier and more satisfied than those who were given the money to spend on themselves.13
The second principle is a close relative of the first, and is particularly appropriate for setting rewards for other people. This is to abandon the idea of paying for things completely and to think about things that money cannot buy. Public bodies, for example, should think more about the things they have access to that might offer much stronger value to someone than cash (the fallback option). Imagine the lure of being the only person who is allowed to park where it is usually forbidden for a year; or to have lunch with an individual for whom you have a particular admiration (the premise behind a lot of money-raising auctions). When the city of Oslo wanted to get more people to start buying electric vehicles, for example, they allowed anyone driving one to use the bus lanes. Not only did this increase the number of electric vehicles purchased, it also made them more visible too – suddenly it was very apparent how many other people were in environmentally friendly rides. At the Behavioural Insights Team, we devised a small-scale version of this ‘money can’t buy’ principle with one of the founding members of the team, Simon Ruda. Every year we have specially made pens produced at Christmas, embossed with the Behavioural Insights Team logo, the initials of the recipient, and the year. The equivalent worth of these pens is relatively small, but everyone attaches great value to them – far beyond what they cost to produce. So if you’re thinking of a meaningful reward, and want to consider non-financial incentives, a good place to start is by imagining what you could do that money cannot buy.
If all of this sounds a bit too goody-two-shoes for you, there is a third tactic, which can be extremely powerful. This is what Dean Karlan and Ian Ayres call ‘anti-incentives’, and they can help to stoke your motivation in ways that no normal reward can. The simplest kind of anti-incentive involves making a financial pledge to a cause or charity that you really despise. So, think of your least favourite sports team, politician or organization, and then commit to making a donation to that individual or organization if you fail to achieve your goal. You will find that a £50 contribution to the trade union organising strikes on the trains that get you to work or the right-wing party promoting policies you disagree with (depending on your political persuasion) will have a far greater impact than the equivalent straight reward or penalty. Of course, as Rory showed with his exercise regime in which he committed to wear the shirt of Arsenal football club (the team he despises most), it needn’t be a financial incentive. It just needs to be something that you really don’t want to do. These sorts of non-financial anti-incentive can be the most powerful of them all. One of the great things about anti-incentives is that the sums of money involved do not have to be large. A small financial contribution to the organization you despise most in the world will likely hurt much more than several times that amount subtracted from your bank account. But as a result, you should take heed of one of the most important lessons from earlier in this chapter: you have to make it binding, which means that you have to be willing to follow through on the pledge you made. So think carefully before setting anti-incentives; they shouldn’t be entered into lightly!
Whereas all the other golden rules in this book have been about a positive step that you can take to achieve your goal, this one has primarily focused on how things could go wrong. It is possible for reward mechanisms to backfire if they are set inappropriately. But with a few, simple techniques and a bit of thought, it’s possible to set yourself rewards that will help to spur you towards your goal.
This chapter has been about putting in place rewards to help you or others achieve certain goals. But we’ve seen that it’s not as simple as we might assume. You should ensure that any overarching reward is meaningful by focusing on four key principles: directly link the reward (or sanction) to your overarching goal; make sure it’s sufficiently meaningful to you that you really care about the outcome; ensure that it is binding; and think about setting it up so that you stand to lose (rather than gain) something. But alongside a big reward for achieving your ultimate goal, you should consider supplementing this with smaller incentives linked to specific ‘chunks’ of activities. The idea here is to be able to put in place mechanisms that offer you frequent equivalents of the pat-on-the-back, which can help to encourage the formation of good habits. Finally, we highlighted that you should be aware of the potential for straight financial incentives to undermine your intrinsic motivation. Thankfully, there are lots of ways to avoid this happening – for example, by framing your incentives carefully, rewarding yourself with experiences instead of money, or even creating ‘anti-incentives’. You could also consider using group incentives since (as the next chapter will demonstrate) drawing up the help of others can be one of the most effective ways of helping you to achieve your goals.