It’s funny that despite being such an important part of the economy and our lives, not much thought is given to why we work. It is generally taken as a given while economists focus on more important work. It is usually assumed that work is something that people don’t want to do and they must be compensated with money to make them do it. No one would work unless they had to, its only the need of money that gets people up in the money. It is an article of faith among economists that people respond to incentives and this usually refers to monetary incentives. After all, didn’t the Soviet Union fall because people weren’t paid enough and therefore motivated enough to work? Simply, if you want to motivate someone to work, you must pay them to do so.

But the evidence suggests something different. It suggests that people are not just another factor of production like a horse or a machine. Instead, people act contrary to the traditional thinking and sometimes offering money makes people work less than if they were unpaid. For example, Dan Ariely and others did a study in India where they offered to pay participants in exchange for completing simple tasks. Participants were either paid 50 cent (equivalent to one day’s wage), $5 (equivalent to two weeks wage) or $50 (equivalent to five months wage). What do you think happened? Surely the group with the strongest incentive (most money) worked the hardest? Surprisingly, the middle group were just as productive as the lowest paid group, but the highest paid were the least productive of all. A similar experiment was run among MIT students with similar results, the group with highest incentives, performed the worst.

These are not one-off flukes. A study of 100 published results found that overall, increasing rewards, decreased motivation. Why did this happen? Part of the reason comes from the fact that offering a reward, narrows the focus on the goal (after all, that is the point). However, while this narrow focus is beneficial for routine and repetitive tasks, it is damaging for tasks that require creativity or cognitive skills. The reward also increase the pressure and stress of the task. But more importantly, these studies suggest that money is not the main motivation people have. It seems to motivate us on a basic level (after all we would starve without money) but beyond a low threshold, more money doesn’t make us work harder.

So what does motivate people? The work itself can have intrinsic motivation according to Daniel Pink, so long as it fulfils three main drives: Autonomy, Mastery and Purpose. Autonomy essentially means that we have control over our lives. It is different from independence, in that it can involve working with other people, instead it is about having power to make decisions that affect your life. The most uninspiring and unmotivating jobs are those in which we have no control over what we do. Studies show that where workers have autonomy, it increases their work satisfaction, productivity, commitment to the job and general well-being. This can be done by giving employees a goal, but letting them decide the best way to achieve it. By giving people more control over how they spend their day such as the decision making process, their hours and other conditions of how they work, people are more motivated to do a good job.

Secondly, people want to have a purpose. They want to feel that their work means something and that they have something to show for it. A serious problem with modern office work is that a lot of the time you don’t have anything physical to show at the end of the day. This can sometimes lead to a feeling that the work is purposeless or just endless drudgery. When people feel their work has some meaning then they will work harder regardless of the compensation. As the saying goes “If you do what you love, you never have to work a day in your life.”

Dan Ariely ran an experiment to test this. He took a group of people and offered to pay them for each Lego set they built. The first group built an average of 11 sets which were put away and disassembled after the people left. However, for the second group as soon as they completed the set, it was disassembled before their eyes. This made it clear to them that their task was pointless. Despite receiving the same reward for their work as the first group, the second group built only 7 sets. In a similar experiment, Ariely had students complete problem set before handing them up to the experimenter who would either A) briefly look at the paper B) completely ignore it or C) shred it immediately. The students were paid (a declining amount) for each problem they solved. Such was the discouragement from seeing their work shredded before their eyes that the people in group C needed twice as much money as group A to keep going. Interestingly, having your work ignored was as discouraging as having it shredded in front of you.

Work itself can have an intrinsic motivation. Work is such a key part of who we are that when people introduce themselves they usually state their occupation directly after their name as part of their identity (“I am a . . .”). People want to have a skill in life and to achieve something. For many people, work can provide this sense of achievement. Throughout my career I have seen a lot of hard workers, even in jobs that weren’t glamorous or well paid (some weren’t even paid). There is an urge among most people to do a good job, regardless of how much money they’re getting. After all, why do I write this blog? I’m not getting paid or any other benefit. Nor is it easy, you wouldn’t believe me if I told you how many hours I put into this blog post. I write it because I love writing and I’m proud of the end result (well, most of the time).

Even if we didn’t need money, people would still work. It defines us, gives us meaning, a sense of achievement and something to be proud of. Money alone can’t motivate people if they have no control over their job or feel that it serves no purpose. The evidence shows that it can often make things worse.