Jonathan B. Wight

Via David Brooks comes this interesting report on incentive pay and motivation:

If you want a person to work harder, you should offer to pay on the basis of individual performance, right? Not usually. A large body of research suggests it’s best to motivate groups, not individuals. Organize your people into a group; reward everybody when the group achieves its goals. Susan Helper, Morris Kleiner and Yingchun Wang confirm this insight in a working paper for the National Bureau of Economic Research. They compared compensation schemes in different manufacturing settings and found that group incentive pay and hourly pay motivate workers more effectively than individual incentive pay.

One simple explanation for this comes from Adam Smith, who noticed that people have passionate feelings about justice and injustice.  Smith also also noted that people are behaviorally irrational in terms of generally over-estimating their own contributions (self aggrandizement).  Put these two together and you have rampant resentment against others who get higher individual rewards for group activities.

Jonathan B. Wight

As noted in Mark's post, for several years New York Times columnist David Brooks has been exploring Adam Smith’s moral sentiments model and the experiments and neuroscience discoveries that relate to it.  He has compiled this into a book: The Social Animal: The Hidden Sources of Love, Character, and Achievement (Random House 2011).

On NPR yesterday Brooks gave a synopsis: 

Over the centuries, zillions of books have been written about how to succeed. But these tales are usually told on the surface level of life. They describe the colleges people get into, the professional skills they acquire, the conscious decisions they make, and the tips and techniques they adopt to build connections and get ahead. These books often focus on an outer definition of success, having to do with IQ, wealth, prestige, and worldly accomplishments.

This story is told one level down. This success story emphasizes the role of the inner mind — the unconscious realm of emotions, intuitions, biases, longings, genetic predispositions, character traits, and social norms. This is the realm where character is formed and street smarts grow.

In short, success is more than technical skills; in some arenas it is mainly the result of emotional cognitive intelligence that can be developed.  It deals with nuance and intuition and character.  It is the sort of intelligence that “Watson” the IMB computer will have a difficult time mastering.

Mark D. White

In his recent column, "The Values Question," David Brooks definitely has the right idea in general regarding health care reform, making a bold statement that I completely agree with (especially the bolded part, emphasis mine):

It’s easy to get lost in the weeds when talking about health care reform. But, like all great public issues, the health care debate is fundamentally a debate about values. It’s a debate about what kind of country we want America to be.

At their core, great public issues are rarely economic--they're ethical. Focusing on costs--whether we're discussing health care, national security, and so on--misses the point, since it assumes that costs are the only (or most) relevant factor, and this is itself a normative statement. While costs may be a critical component of any public debate (especially when scarce resources are involved), they are rarely to be considered to the exclusion of other values (such as justice, dignity, rights, and so on).

Brooks ends on the same note:

We all have to decide what we want at this moment in history, vitality or security. We can debate this or that provision, but where we come down will depend on that moral preference. Don’t get stupefied by technical details. This debate is about values.

While I disagree with most of how Brooks fleshes out the debate, I do appreciate that he is focusing on values, which is what the debate truly is (or should be) about. I hope to have much more to say on this in the future.

Any thoughts?