Is it possible to learn something new about how to help motivate others to do their best? Yes — according to Tyler Cowen, a professor at George Mason University, who shows readers of his book Discover Your Inner Economist how to use fundamental economic principles to get more of what they want.
Cowen writes that the central concept of economics is not money but rather incentives. “An incentive is anything that motivates human behavior, or encourages an individual to make one decision rather than another,” he writes. An incentive can be money, a tip, a smile or an act of praise. Here, Cowen departs from the attitude that economists advocate the total commercialization of everyday life. “One of the most important lessons of economics is how to cope with scarcity,” he writes. “Economics developed out of a recognition that many things worth having don’t just fall into our laps in the course of our everyday lives. The real purpose of economics is to get more of the good stuff in life.”
Cowen points out that monetary incentives don’t always get the best results. For example, paying your child to do the dishes doesn’t work. “People are motivated by external factors, such as money, and also by factors internal to their psyche, such as enjoyment, pride, or wanting to do a good job for its own sake.” He notes that being paid money for a job can replace internal motivation, but that often, internal motivations are what get the job done. So, if a parent tells a child to do dishes, the child may feel some need to cooperate and meet expectations. This scenario is mirrored everyday in the workplace. Although compensation, including bonuses, is key to strong performance, often employees and co-workers benefit from other incentives, including being recognized for their work and for being included in decision-making.
Cowen applies the inner economist theory to enjoying art. “Money alone doesn’t get what we want. Yes, we can buy a notable Picasso portrait if we have $100 million to spare,” he writes. But simply owing the painting does not guarantee enjoyment. He believes getting the most out of culture is an acquired skill that depends on immersion in a cultural environment combined with a willingness to learn and adjust. He tells readers to ask “what is scarce,” e.g., time, attention, or money, and to admit that we don’t care as much about culture as we like to think we do. He notes that most museum-goers spend more time reading the placards than looking at the art. He suggests asking yourself which picture you would take home — if you could take just one — and why. This forces you to keep on paying attention. “Ranking the pictures focuses our attention on our favorites,” he writes. Another angle: Pretend you are shopping for pictures on a budget. The pricing, shopping and browsing experience keeps us interested. How would you spend $500,000 at the Metropolitan Museum of Art? With a budget, you’re more likely to enjoy some less-famous works. Finally, at the end of the visit, ask which painting stuck with you, suggests Cowen.
Cowen offers other inner economist techniques, from how to enjoy fine dining to how to donate to a cause that is most important to the donor. Overall, Cowen provides readers with a method to use economic principles to help explain everyday problems and challenges. It would be interesting to apply the principles to how we save, invest and learn. Overall, Discover Your Inner Economist allows readers to explore how incentives motivate decisions.
Mary Scott is the co-author of Companies with a Conscience and can be reached at firstname.lastname@example.org.