Why Money Can Kill Motivation

Posted on January 02, 2012. Filed under behavioral-economics

The Overjustification Effect: This is a good distillation of what motivates us, and why money isn’t always a good motivator.

According to the research, in modern America the average income required to be happy day-to-day, to experience “emotional well being” is about $75,000 a year. According to the researchers, past that point adding more to your income “does nothing for happiness, enjoyment, sadness, or stress.” A person who makes, on average, $250,000 a year has no greater emotional well-being, no extra day-to-day happiness, than a person making $75,000 a year.

It goes on to mention several experiments that have proven that getting paid for something often makes us enjoy that thing less. When we do something for free, we often do it for the love, without any thought to compensation. But as soon as we get compensated, everything suddenly becomes related to that and we evaluate our work in light of that compensation.

Consider if you helped your buddy move into a new apartment. He’s your friend, so you offer to help him out, and you spend a day doing it. it’s a lot of work, but that’s what friendship is about. However, he ends the day by offering $5 for your time. Now, five dollars is more than nothing, right? But the problem is now your motivation is no longer altruistic, it’s now cast in the light of compensation, and five dollars is insulting for a day of back-breaking labor.

I read this same thing in a good book called “Drive: The Surprising Truth About What Motivates Us.” it’s worth reading.

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