Perverse Incentives

Another item checked off the bucket list. . .I’ve used the word perverse – not just in a blog post, but in a title.  We take victories, small or large, where we can get them.

We’re coming off a week in which North Korea cut hotlines, restarted reactors and made a credible threat that affects all of Japan, half of China and. . .Guam.   Worse yet, Rutgers’ basketball coach got fired for trying to what made Bobby Knight famous.  Actually, his mistake wasn’t an overdone and offensive impersonation.  It was failing to understand the implications of smartphones that take video, coupled with the CNNization of America the world.

Also this week, two cases were reported of incentives gone wrong.  In Atlanta, 35 teachers and school district officials were indicted for changing students’ answers on standardized tests.  The superintendent reportedly received $500,000 in bonuses as a result of the artificially achieved “improvement” in education results.  And DLA Piper, the world’s largest law firm, offered a stunning non-apology for getting caught with its pants down.  It couldn’t pull them up because both of its hands were deep in the pockets of one its clients – a giant overbilling scandal beautifully documented in emails that said things like “churn that bill!”   The client, by the way, engaged DLA to help it with a bankruptcy filing.

One of my earliest posts was about the consequences of measuring schools purely through standardized tests.  After all, it’s not like the English system, where those tests directly affect the future of each student.  Here, they just affect the school.  I have a soft spot for that post, mostly because it contains what I think is my second best joke ever.  If you’re tempted, you can find it here.  My objection wasn’t to the idea of accountability, which I’m all for.  It was that the testing system drives even successful schools to teach to the test, rather than to the student.

I’ve never really contemplated law firm overbilling, but I’m not exactly surprised to read that it’s rampant.  I used to fill out time sheets as a member of a consulting firm.  Mine were sloppy but not unfair, which I think was generally true.   And we charged our clients fixed fees.  We abused them, to be sure, but the abuse occurred more in the work than in the bill.

What I thought about, though, when I read these stories, was research reported by author Daniel Pink in his book Drive, which discusses what really motivates people.  You can skip the book and get the gist in this terrific, short, animated video.  (That long list of adjectives is there to get you to watch the video.  You really should watch it.  No one ever clicks through to the links in these posts, but you should. . .)

According to Pink, in anything beyond purely manual labor, money serves as a motivator only until you have “enough,” which for most Americans is about $75,000 a year.  After that, he says, money actually de-motivates.  People are much more strongly motivated by a purpose larger than themselves, a sense that by doing their work well, they are making the world a better place.

Well Mr. Pink, DLA and the Atlanta Public Schools beg to differ.  Money does appear to motivate.  It motivated 35 teachers in Atlanta to line their pockets rather than build their students’ brains (the tip of an iceberg according to the news reports).  And it clearly motivated a bunch of lawyers to rob a client blind.  Again, both the reporting and logic suggest that this is the tip of another iceberg.  And then there was that Wall Street thing. . .

Perhaps money just motivates wrong people to wrong things?  If only we had a test for purpose.

4 thoughts on “Perverse Incentives

  1. Really nice blog. Particularly that dig at consultants.

    Steven Smolinsky

    Benari LTD

    Wharton School

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    c: 610-324-1218


    the Benari Blog

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  2. Perverse Incentives so aptly describes how many are totally clueless about what they are really rewarding…and the results this will bring. Couple that with the fact that to my continued amazement supposedly intelligent people still don’t seem to understand that nothing is private anymore, and thus we have the situations you describe. People, in spite of Pink, letting their venal instincts rule so their wallet will swell.

    I have well known disdain for the way college sports have been raised to the level of religion and for how many seem to have forgotten that college is about education not making the most famous and winningest coach a multimillionaire at the expense of what often seems like slave labor. You document another result of this bizarre situation. Beat them up and use racist terms while doing it so your $1.2 million dollar salary as coach will become larger. After all, who can live on such a paltry sum?

  3. Glad you finished with what I think is the actual case here. Dilwads should not be considered when summarizing what motivates good people. And there, my friend, is my bucket list check-off of using Dilwad. Another great column!

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