How to inspire people with prize money

trophies

Would you put in more effort if you thought you could win a large cash prize?

What about if that prize was broken up into a series of smaller prizes – how hard would you work then?

‘In praise of big prizes’ at the Freakonomics site, had some advice for a professor at the University of Texas who changed his practice of handing out cash prizes to students in favour of a more level system.

In Praise of Big Prizes

The author writes that actually,

“larger top prizes and a steeper prize gradient will elicit more effort than a flatter gradient, one with more prizes of smaller amounts (Lazear and Rosen, 1981).”

He suggests that a large amount of prize money is what motivates top sports people such as Tiger Woods, and that perhaps the professor could adapt and use this approach in an educational setting:

“he would get better written work if he went back to the old system, just as Tiger Woods is better motivated by a big winning prize for a whole tournament than he would be by small prizes for having the best score in a particular round.”

In a previous post on Fourcultures about Fatalist development aid I noted how schemes to randomly assign cash handouts to poor people seem to work quite well. According to the Economist, though, there are situations in which conditional handouts work better. In one example, would-be aid recipients were required to submit a business plan before going into the lottery.

Perhaps these schemes using contrived randomness, a Fatalist strategy, would be better if they used high value tournaments instead – a very Individualist strategy.

One small problem is that the prize money that seems to motivate Tiger Woods to get out of bed is slightly higher than that available in college classes or in development aid programmes.

First prize for the 2013 US Masters  tournament was $1,440,000. That’s quite a lot of money. Even the 50th placed golfer still won $20,160.

In contrast, the top University of Texas student paper won $1,500. In even starker contrast, Kenyan villagers identified by the charity Give Directly receive $200.

“We send each recipient household a total of $1,000 over one to two years, or $200 per household member for the average household. Our analysis suggests that this amount is fair, well-understood, and potentially transformative.”

When Individualism can provide a US Masters level of money to colleges and to poor villages in Africa, maybe then its policy prescriptions will be more credible.

See also: Fatalist development aid

[image credit: public domain, pixabay]