Saturday, July 26, 2008

Rewards, but at what hidden social cost?

July 26, 2008

By Lydia Lim
MONEY talks, and its voice is creeping into areas once considered off-limits.

Today, it has become acceptable to pay children to study, couples to have children and perhaps, in the not too distant future, people to give up one of their kidneys.

What is our society losing in the process? Do the benefits of monetising motivation exact a cost on social values?

I raise this issue as our society contemplates legalising the trade in human organs.

That we are considering such an option reflects how moral repugnance against such sales, which once used to be widespread, seems to be diminishing in the face of a global shortage of organs for transplant.

The straightforward, hard- nosed solution proposed by economists like Professor Gary Becker, whose work was cited by Health Minister Khaw Boon Wan in Parliament last Monday, is to allow a market in human organs where prices for kidneys and livers can rise to the point where supply matches demand.

Prof Becker, the 1992 Nobel laureate for economics, argued that 'markets in human organs are the best available way to enable people with defective organs to get transplants much more quickly than under the present system'.

'I do not find the arguments against allowing the sale of organs compelling, especially when weighed against the number of lives that would be saved by the increased supply stimulated by financial incentives,' he added.

Poised against him are the likes of the late, great British social scientist Richard Titmuss, who insisted on the superiority of altruism over price as the motivator for such donations.

Professor Titmuss based his arguments on a comparison between the American system of paying for blood and the British system, which relied on donations. He chronicled the contrast in a 1970 book entitled The Gift Relationship: From Human Blood To Social Policies.

He feared the impact that markets for human blood and organs would have on society.

'Atomistic private market systems 'free' men from any sense of obligation to or for other men regardless of the consequences to others who cannot reciprocate,' he wrote.

Despite what some economic literature would have us believe, most of us would agree that human beings are not motivated solely by a desire for selfish gain.

The father of modern economics, Adam Smith himself, recognised that.

'How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it,' he wrote.

But it is only in recent decades that economists have been able to test the truth of Prof Titmuss' warning that monetary rewards undermine people's sense of social obligation and altruism.

Drawing from psychology, these economists have developed methods to analyse changes in human motivation.

Rewards and regulation in the form of fines and other punishment drive people's behaviour from the outside. They lead to what is known as extrinsic motivation.

Intrinsic motivation, by contrast, drives people to perform an activity for which they receive no reward except the activity itself.

Social psychologists have observed a phenomenon known as 'the hidden cost of reward', in which external incentives can actually cut away at people's inner motivation for doing what they consider worthwhile.

In a 1994 paper, Swiss economist Bruno Frey analysed this phenomenon's implications for socio-economic policies. He examined different situations in which payment either 'crowded out', that is, diminished intrinsic motivation, or 'crowded in' and reinforced it.

He found that two factors contribute to the crowding out of intrinsic motivation.

First, the person in question perceives the external intervention as controlling, thus undermining his sense of self-determination.

Second, the external intervention sends the message that what he is currently doing is unsatisfactory, which then impairs his self-esteem.

What these findings bear out is the common-sense observation that money is not always the best way to get people to do what is right.

A market in human organs may very well crowd out altruistic donations - what one person chooses to do for another for no other reward than the gift itself.

The same applies for financial incentives aimed at getting couples to have more children.

Recall the anger of some couples against government interference in such a private matter.

Policymakers would do well to review any pro-family measures that intended recipients might view as controlling, lest they undermine people's inbuilt belief that children are good to have in and of themselves.

Ultimately, what Prof Frey's research does is sound a warning bell against an over-reliance on extrinsic motivating factors.

From a purely economic point of view, there might be nothing wrong in allowing rewards and punishment to crowd out intrinsic motivation altogether.

After all, cash bonuses and fines might be a far more efficient way to drive human behaviour than allowing people to decide based on their inner inclinations.

But how would that change the tenor of our society?

Psychologists have found that extrinsic and intrinsic motivation are linked to different modes of behaviour. The first invites calculativeness, discipline and professionalism.

The second draws out playfulness, conviction, amateurish actions and innovativeness.

When we start buying and selling what was once priceless, are we paving the way for a society that is less compassionate and more calculative?

Will personal conviction dry up completely?

I would be loath to live in a society where money has so disarmed our inner moral compasses that the only reason to either perform or refrain from an activity is the price tag attached to such behaviour.

Wouldn't you?

No comments: