Bruno Frey: Intrinsic Motivation

November 5, 2007

I attended a lecture on Friday by Professor Bruno Frey of the University of Zurich. He is one of the world’s leading welfare economists and gave a delightful presentation on the economics of happiness and how that impacts public policy.

I guess my key takeaway was the idea that the pay for performance somehow crowds out any intrinsic motivation to get the job done. Of course, there are some tasks that just have no intrinsic motivation, in which case, you’ll just have to pay. But since most jobs have some level of innate value in the task and the deliverables aren’t necessarily quantity but rather quality and novelty, he proposes that the solution is to pay people a reasonable market wage but to insure the quality of the deliverable through an ex-ante selection of people. The idea is that in a good environment, certain people will flourish and it is the job of the employer to find those people. It is quite a departure from the usual ex-post evaluations that we do. I thought it was an interesting point and I’m currently in a job that is probably the closest to Professor Frey’s recommendation as I’ve ever been. If anecdotal evidence is anything to go by, I’d say that he’s right.

More than anything, I think his work provides a refreshing perspective on how we do public policy. It introduces a level of cynicism to the current “super-scientific” method of GDP calculations (they aren’t the gospel truth!) and a level of optimistic to the upcoming trends in behavioural and welfare economics.

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