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.

http://freakonomics.com/2013/10/28/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]

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Fatalist development aid

The Economist evaluates a scheme to give poor people cash handouts at random, instead of through traditional aid programmes. Mixed results…

http://www.economist.com/news/international/21588385-giving-money-directly-poor-people-works-surprisingly-well-it-cannot-deal

Fatalism, as described by Grid-Group Cultural theory, is more than merely the worldview that blind fate rules our lives. It takes this as a given and then seeks to make the world even more random. This has been termed ‘contrived randomness’. It has a strong pedigree as a tool for public policy (for example, random assignment of jury service, random alcohol checks on drivers, etc.) Taken to further lengths it can be used in ‘aleatory democracy’ – harnessing contrived randomness to benefit democratic organisation.

See also: How to be a fatalist

The really real reason why banks have so many scandals

“Since we have not more power of knowing the future than any other men, we have made many mistakes (who has not during the past five years?), but our mistakes have been errors of judgment and not of principle.” J.P. Morgan Jnr, 1933
A couple of months ago I was toying with the idea of writing a post about how the commercial finance sector in the UK and the US seems to be incorrigably broken as a result of the dominant sentiment that it’s only a crime if you get found out. I saw this as evidence of an over-reliance on the Individualist cultural worldview.
But it seemed too extreme. I didn’t want to promote a sweeping  “indictment of banking as an inherently evil industry filled with shysters that are intent on fleecing anyone they can.” Surely they weren’t all corrupt. All generalizations are wrong, (especially this one, as the saying goes). Surely I was over reacting. So the post never got written.
Then the Barclays Libor scandal broke in London…

Samuel Bowles on economic inequality as a policy option

http://tuvalu.santafe.edu/~bowles/

Prof Sam Bowles has a couple of books that compliment the work of Richard Sennett on cooperation – one published in 2011, the other due later in 2012. Whereas Sennett takes a sociological approach, Bowles focuses on economics. In particular he has done some interesting work on computer modelling of property rights.

Mutualism: Flavour of the month

As predicted this time last year, mutualism is the new favourite political idea.  It has been so ignored by policy makers over many decades that it has temporarily lost its left/right label and the Tories are also talking about it.

But it shouldn’t be thought that mutualism is a way of making money grow on trees. You can run money-generating operations on this model, but money-spending operations (eg most public services) require external funding. As Chris Bertram at Crooked Timber puts it:

‘There seem to be two possibilities: either the mutuals have independent sources of funding or they don’t.’

It will be interesting to see how much of the utopian mutualist talk survives the forthcoming UK general election, and how far the resulting government ends up supporting what Rudolf Bahro might have called ‘actually existing mutualism’.

Read: A mutual alternative to markets and hierarchies

Puzzling over the economics of academic journals

Oliver Marc Hartwich of the Centre for Independent Studies wrote in the Australian about the academic journal industry. He was just as puzzled about it as Fourcultures has been. Continue reading “Puzzling over the economics of academic journals”

Tempting fate in schools: contrived randomness as educational policy

Australian economist Andrew Leigh has entered into public discussion with Noel Pearson about Aboriginal inequality by proposing that randomised trials should be initiated for those educational innovations supposedly aimed at improving outcomes for disadvantaged groups. He takes his cue from Harvard economist Roland Fryer, who is well known for testing the effectiveness of cash rewards on academic achievement. Provocatively, Leigh has called proponents of the approach ‘the randomistas‘. (You can also hear about randomised education trials).

The rhetoric of the scientific method sounds very sensible. After all, if it works in medicine, why shouldn’t it work in education? Indeed we can go further: since we don’t accept medicine that hasn’t been tested in a randomised trial framework, why should we accept education without similar confirmation of its effectiveness? The point Fryer and now Leigh have been making is that much educational policy is ideologically driven, rather than evidence driven. We need proper evidence and for them, randomisation is the mark of proper evidence.

So is there any downside? Continue reading “Tempting fate in schools: contrived randomness as educational policy”

Flaw in the model

Alan Greenspan found a flaw in the model. What happens when you find a flaw in yours? Do you keep going with the old model as long as you can, right up to the point at which you experience your own local equivalent of the global financial crash? Or do you somehow try to extricate yourself from the model and defect from your own point of view? This second possibility is clearly much harder than just keeping on going, but then it might also be, in the long run, less damaging.
Let’s face it, Greenspan didn’t ‘find’ a flaw – the flaw was foisted upon him by events spiralling out of his control. Had he queried himself sooner, the rest of us might have been less impacted by his last minute flaw-finding.
Churchill is supposed to have said ‘There is nothing wrong with change, if it is change in the right direction. To improve is to change; to be perfect is to have changed often.’
So how do we do it – how do we defect from our own framework of thought? Continue reading “Flaw in the model”

Why Psychology fails to explain the Global Financial Crisis

Listening to Australian historian Robert Mann’s recent lecture at the Melbourne Writers’ Festival on whether neo-liberalism has a future, I was struck by the deficiency of the rush to psychological explanation. In seeking to analyse the supposed inadequacies of the free-market ideology, there is an increasing tendency to rely on psychology as the master discipline, the new ‘commmon sense’ that will unlock the secrets of collective human behaviour. Just as the neo-liberals championed the perfectly rational economic actor, homo economicus, who as an individual is unrecognisable from any other perfectly rational individual, so the latest commentators attempt to correct and complete the picture by pointing out that this vision misses out humanity’s essential irrationalism, epitomised by a host of psychological quirks – which set the bounds for Kahneman and Tversky’s bounded rationality. But whether for or against the unfettered free market, these supposedly conflicting approaches share much more than they disagree on: namely a confidence that what goes on in our heads is what it’s all about. Continue reading “Why Psychology fails to explain the Global Financial Crisis”

Accountability is the problem, now what’s the solution?

Individualist social organisation operates on the assumption that accountability structures and measures are the problem, not the solution. They act as a brake on the forward momentum of heroic risk. Who dares wins. The only accountability required is clearly success or failure in the market. Accountability is an obstacle to success that needs to be overcome. On this view, it’s hard to see how accountability structures could be ‘reformed’. The only thing worth doing with accountability is to dismantle it.

Now that the dust of the global financial crisis is beginning to settle, one of the key lessons learned seems to be Continue reading “Accountability is the problem, now what’s the solution?”