Artificial Incentives

Professor Ariely,

I’m usually a big fan of your blog, but this post is really disappointing. I understand your point about well-marketed, but useless things serving as motivation for us to work hard, leading to more production, but I’m not convinced that we end up with a NET benefit. While you paint a very nice picture, I find your example akin to digging a hole, and filling it back in. Instead of having people fill holes (or buy bottled air), we’d be much better off if the reward for honest work actually increased individual or collective welfare.

Coincidentally, I’ve been thinking about how we can motivate people to be more innovative. The approach the US seems to favor is to give massive (some would say disproportionate) reward to those who innovate and succeed. But why do we people need such fat carrots to be sufficiently motivated to innovate? I think the answer has two main components: Risk (and aversion), low initiative (not necessarily laziness). Big rewards address the latter (or in your analysis, being able to buy lots of Respirer or iPods), but what about trying to reduce risks? If the goal is to spur innovation, maybe we should be strengthening social safety nets, rather than promoting a winner-takes-all mentality.

I noticed that you temper your statements about induced desire in the last paragraph of this post, but I don’t think society is in any danger of “discounting” the supposed benefits of artificial desire. There’s plenty of it to go around. Practically every aspect of life has been commercialized. I don’t have the exact figures, but I know that the amount of advertising that people are exposed to these days is staggering.

As a person who works for major advertising company (and therefore dependent on advertising being a good business), I’m pretty sure the world is NOT experiencing a shortage of it. A strong sign of this is the common observation that the function of marketing nowadays seems to be to convince us that we need things that are actually useless, as opposed to letting us know about products that fulfill existing desires that we wouldn’t otherwise know how to fulfill. Personally, I’d really like it if my life were less commercialized. Taking that a bit further, I think that we’d collectively be better off if marketers unilaterally decided to turn down the noise. Unfortunately, their incentives are driving them in the opposite direction.

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