Better Than Cash

SHANKAR VEDANTAM, HOST:

This is HIDDEN BRAIN. I'm Shankar Vedantam. You may have noticed that our modern world is saturated with awards.

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VEDANTAM: Many of these awards have been created in the past century, but awards have been around for millennia. The Greeks and Romans had them. Kings and queens have long given them to their bravest warriors. Societies all over the world have recognized their best citizens with prizes.

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BARACK OBAMA: We pay tribute to those distinguished individuals with our nation's highest civilian honor - the Presidential Medal of Freedom.

VEDANTAM: Awards are so ubiquitous that we rarely stop to ask, do they work? Do prizes inspire and motivate, or do they cause jealousy and resentment? The upside, the downside and the psychology of awards - this week on HIDDEN BRAIN.

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VEDANTAM: Bruno Frey is an economist who has spent years studying how prizes shape human behavior. He works at the University of Basel in Switzerland. Along with Jana Gallus, he is co-author of the book "Honours Versus Money: The Economics Of Awards." Getting an award makes people feel good, but Bruno says the real benefits of awards are seen long after that initial glow wears off.

BRUNO FREY: When people are given an award in general, they are likely to work better, to be more engaged, to have, as we say, higher intrinsic motivation. That is, they like to work and they like to do what they do and therefore are contributing really to the social good.

VEDANTAM: An important reason awards have this effect is that they are deeply social. Awards are handed out in settings where you are surrounded by your peers. An award can make you feel appreciated by people whose opinions you value. In this regard, an award is very different than a cash bonus.

FREY: Normally, people are not allowed to say how large the bonus is they receive. So it is unknown to other people while awards are always given in a ceremony, sometimes in a lavish one, sometimes in a smaller one, but it's always with other people around. And the person or the organization giving the award specifies exactly why the person or the organization gets the award. And this emphasizes the extraordinary engagement of the people receiving the awards. And that tends to raise the intrinsic motivation because it's recognized because it's appreciated.

VEDANTAM: One of the things that you and others have learned is that people care intensely about the prestige that awards can confer. Perhaps even more than money, prizes provide glory. I want to play you a clip from the world of golf. This is the 2017 PGA Championship winner, Justin Thomas.

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JUSTIN THOMAS: In terms of this week, if I - it's definitely not about the money. It's definitely not about being better than anybody else. Like I said earlier, I just like to win, and I like trophies, so I just want to win. Just to go win not only the tour championship but anytime you can win a year-long race and be known as a champion of an entire year, that's a big deal. So that's - that to me is what I would be most excited about.

VEDANTAM: Bruno, do you see other examples of people who actually prefer prestige and glory to money?

FREY: Yes. There are very many instances of that. Just consider if you want to invite a famous person, let's say, coming from the U.S. to Europe or from Europe to the U.S. If that person has a high income already, a good income, then it's very difficult to get people. There is a nice example, namely Roger Federer, one of the famous Swiss. He earns about $93 million, and I don't think that you can induce him to go anywhere to get anything. But when you offer him a nice award, you have a better chance to do that.

VEDANTAM: I'm wondering about another area that you discuss in the book, which is it's not just a benefit to individuals who win awards, but there are benefits to organizations as well. Especially if you're an organization that doesn't necessarily have a lot of money or you don't have the leeway to pay people a lot of money, awards are really a powerful way to increase motivation.

FREY: Yes, indeed. And it also creates a bond of loyalty between the giver and the recipient. You cannot accept the order by the Queen of England and then say she's a silly woman or I don't care about awards because then people say, why did you accept it? But people do accept awards. Of course, there are cases in which awards are not accepted. But in general, people accept the awards, and then there is a new bond of loyalty, a special relationship to the one who gives the award. And that is also important in for-profit capitalist enterprises.

VEDANTAM: I'm wondering if this might be one of the reasons why you have so many awards in military service especially because it's not just that you're conferring, you know, recognition on people who've done important things, but building those bonds of relationships, the connections between, you know, superiors and subordinates, that is actually essential for a successful military.

FREY: Indeed, and especially the military sector, it's difficult to define what a good soldier, a good officer, a good general, must do because you cannot fix that in advance. So you must rely on the persons to do the right thing.

VEDANTAM: Right. And how do you put a price on bravery or loyalty or integrity?

FREY: Yes. That's not possible because is bravery $10 million or $5,000 or whatever? One doesn't know. While if you give an order and then in the ceremony you say, oh, yes, this soldier did something beyond his duty, something extraordinary, that is totally sufficient to make the recipient very happy.

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VEDANTAM: You conducted a field experiment on awards with the site Wikipedia. This was the German-language Wikipedia. And in Wikipedia, of course, it's the online encyclopedia where each article is crowdsourced by editors and readers. Tell me about the field experiment and what you found.

FREY: We introduced a new award. We invented one, actually, and we gave this award to people who continued contributing work to Wikipedia because we observed - or that is a problem of Wikipedia - that a lot of people contribute one article and then stop. So we introduced an award, which is called Edelweiss.

VEDANTAM: The Edelweiss was a badge that was placed on the profile pages of some Wikipedia editors. The names of winners were also included on a Wikipedia page that described the award. Bruno and his colleague Jana Gallus observed how receiving an Edelweiss affected the retention rates for these editors compared to those who had not received one.

FREY: Previously, 35 percent only continued working for Wikipedia and contributed another article or helped work with an article. And this rose from 35 to 42 percent. So a much larger proportion of people engaged in Wikipedia were induced to go on with the work.

VEDANTAM: Now, of course, someone can say 35 to 42 percent is not a sea change, but, of course, the intervention is relatively inexpensive and cheap. You're basically giving someone a recognition, a title. Wikipedia is not giving them money. It's actually relatively easy to do.

FREY: Absolutely. That's a very important point. This Edelweiss award is absolutely - doesn't cost anything. You just put it on the Web. And - but people really appreciate that. And so this increase in retentions for the work of - especially of newcomers is quite substantial. And to me, it was surprising that it was so large.

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VEDANTAM: Most awards are meant to be taken seriously, but there's a growing genre of awards that are meant to be ironic. There's the Ig Nobel Prize, which recognizes innovations in science that make you laugh. And there's the Razzie, which is given to the worst Hollywood films each year. In 2002, Halle Berry won an Oscar for her performance in the movie "Monster's Ball." Three years later, she starred in "Catwoman." For that role, she received not an Oscar but a Razzie.

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HALLE BERRY: I've got so many people to thank because...

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BERRY: ...You don't win a Razzie without a lot of help from a lot of people.

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BERRY: So, first of all, I want to thank Warner Brothers.

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BERRY: Thank you for putting me in a piece of [expletive] godawful movie.

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VEDANTAM: So, Bruno, what do ironic awards like the Razzie or the Ig Nobel Prize, what do they do? How do they affect human behavior?

FREY: When something is very important, such as a Nobel Prize or Academy Awards, Oscars, it's always attractive to do exactly the opposite. And this raspberry - Golden Raspberry Award is exactly the opposite of the normal Oscar. To be the worst actor or the worst actress is also giving attention. And if one accepts this negative award in such a fantastic way as the actress we just heard, it's very good for her because then people say she's an open person and that throws a positive light on her.

VEDANTAM: Of course, in this case, you know, thanking Warner Brothers is sort of a backhanded way of saying Warner Brothers made a terrible movie.

FREY: Exactly. Yes. She did it in a very charming way, and that's wonderful.

VEDANTAM: Anyone who studies human behavior knows that people don't always act predictably. When we come back - how awards can sometimes backfire and what we can do to design them better.

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VEDANTAM: Corporate awards can be an easy target for comedy on TV shows. One of the running jokes on the sitcom "The Office" was the Dundie Awards. The Dundies were an annual prize given to employees at Dunder Mifflin, the paper company where the show was set.

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STEVE CARELL: (As Michael Scott) The Dundies are about the best in every one of us.

VEDANTAM: Fans of the show will remember that the Dundies were a train wreck, one in which the head of "The Office," Michael Scott, humiliated himself, along with everyone else.

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CARELL: (As Michael Scott, rapping) The Dundies - how can I explain it? Award show I created.

VEDANTAM: You don't have to be an employee of Dunder Mifflin to know that awards can backfire. Sometimes they backfire in interesting ways. For example, the researchers Carly Robinson and Jana Gallus recently tracked 15,000 middle and high school students in a California school district. The school system was giving out awards to students who had perfect attendance. Carly says, to everyone's surprise, the kids who got these awards began attending school less often.

CARLY ROBINSON: When students receive these retrospective awards, it signals to them that they were attending school more than their classmates. And this award also potentially signals that the school had low expectations for their attendance, so they were actually overshooting their school's expectations for their own attendance.

VEDANTAM: So, Bruno, what does this story tell us about how recipients don't always take away from an award what givers intend?

FREY: One should not get an award for something which is the normal part of one's activities because then they lose their meaning. An award should really indicate or signal that one does something extraordinary which is not described or imposed from outside, that really comes from a special engagement. If one hands out an award for just everything, they lose their special character. There's the example of the Purple Heart, which is a very important American award. It was given three times in the American Revolutionary War.

VEDANTAM: Contrast that with World War II where the number of Purple Hearts awarded by the United States was larger by orders of magnitude.

FREY: And you see here the huge inflation. And that means, of course, that a Purple Heart does not have the importance it used to have in the past.

VEDANTAM: So, in some ways, what you're saying is when awards are scarce, people actually look at them and they have value, but you can actually devalue an award by giving out too many of them.

FREY: Absolutely, yes. It's with everything. If one does it too much, it doesn't have any effect anymore.

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VEDANTAM: Let's look at another study. Kirk Doran and George Borjas found that winners of the Fields Medal - this was a prize for mathematicians under the age of 40 - respond in some ways like the students in California. Compared to mathematicians who nearly win but don't, the winners end up dabbling in new areas of mathematics where they end up being less successful. Here's Doran.

KIRK DORAN: I think it's not what John Charles Fields expected. He expected that in giving people a prize to honor and extol their previous work, that would encourage them to do more of the same work. What we find is that, you know, the opposite takes place.

VEDANTAM: What do you make of this, Bruno? In some ways, this paper was arguing that the mathematicians who nearly win, they're tipped to be winners of the Fields Medal, but since the medal is given only to people under the age of 40, there are people who pass the age of 40 without winning it. But ironically, it finds that those people end up being more productive, at least as measured by the number of papers they write. So in some ways, the award is actually not producing what the originator of the award intended.

FREY: It didn't produce with the recipients of the Fields Medal but with the others.

VEDANTAM: (Laughter).

FREY: So in a way, the purpose was reached.

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FREY: And I think the others who didn't get the prize want to get recognition in some other way and therefore work hard while the recipients are satisfied because a mathematician cannot get more than the Fields prize.

VEDANTAM: That's a fascinating idea. In some ways, I think what you might be hinting at is that potentially the benefits of some awards might be seen more in the people who don't win the award because it motivates them to try harder. Even if they'd never win an award, it still helps the whole field because they're doing all this extra work.

FREY: Right. Right. But that's not always the case. Very often, or in many instances, when an award is given to some person or to some persons and those not getting the award may be getting mad or they think they are not appreciated, so there is also this negative side about it.

VEDANTAM: I remember reading a column by Paul Krugman. He was writing in The New York Times a few months ago. And he was talking about how people are often dissatisfied. Even in the field of economics, he said, you know, there are people, you know, who are working at various universities who are envious of their colleagues who are working at, you know, Harvard and Chicago. And the people who are working at Harvard and Chicago are envious of the people who have won the Nobel Prize and they haven't won it. So even when you're at the very top of your game, you can find sources of resentment when you see that other people around you are doing even better.

FREY: I heard this story that a Nobel Prize winner, when he gets the Nobel Prize or she gets the Nobel Prize, starts thinking about the - I think there are five people who got two Nobel prizes. It's incredible.

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VEDANTAM: Yes, of course. So there's no end to it.

FREY: No (laughter).

VEDANTAM: In 2016, former British Prime Minister David Cameron was criticized for seeking to give high state honors to a bunch of cronies. Among the list of recipients was Mrs. David Cameron's stylist, Isabel Spearman. Here's what Tom Watson of the Labour Party had to say about David Cameron's awards list.

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TOM WATSON: I think people will be shocked at the scale and size of this list. You know, there is a reasonableness test that should be applied to these lists. And I think most reasonable people would say it's unacceptable to give Mrs. Cameron's stylist an OBE and to hand out knighthoods to members of Parliament like confetti.

VEDANTAM: So it surely must be the case, Bruno, that award givers sometimes misuse their position to confer honor and legitimacy on their friends.

FREY: Absolutely. If that is done, that is a grave mistake. So it's a bad policy, for instance, for a king or a queen to give it to people who are very much on their side because then the award or the award given loses importance. It would be a bad policy.

VEDANTAM: So there's a tension here, isn't it, which is if you have just come into power, you know - and I think you'll give the example of Hitler actually doing this with the Iron Cross, which was also a medal that was given out very - it was very scarce, initially. And then once Hitler came to power, he sort of distributed it like candy, in some ways, to large numbers of people, if I recall correctly.

FREY: Exactly.

VEDANTAM: But there must be a temptation to do this because you've come in and you want to solidify and strengthen your position. And the cheapest and easiest thing to do is to just simply spew these awards around.

FREY: Yes, that is the problem. Before, we discussed that a positive side of awards is that they don't cost much money, but the negative side is that you can distribute heaps of them, and it doesn't cost you anything, but it destroys the award.

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VEDANTAM: If you can undermine an award by giving it out to undeserving people, Bruno says you can also undermine awards by doing exactly the opposite. If you give awards only to people who are already acknowledged superstars, this shuts the door to outsiders who may have truly revolutionary ideas. Bruno cites the example of an extraordinary researcher who didn't win the Nobel Prize. The reason - he was also known as a blunt provocateur.

FREY: Gordon Tullock was a very extraordinary economist. He was a professor of economics but who was a lawyer. And that was the first thing is that he is a little bit of an outsider. He wrote with James Buchanan an important book in public choice, and then James Buchanan won the Nobel Prize, though much of the contribution of the book is due to Gordon Tullock. And it's even written in the introduction that he contributed the major idea of the book. And the reason he didn't get the prize was - I was told that by members of the Nobel Prize committee that they didn't know how he would behave when he gets the prize because the Nobel Prize winners afterwards give a talk of gratitude.

And there was one example already that is Friedrich von Hayek. He got the Nobel Prize and then said the Nobel Prize is not a very good idea for economists. And, of course, Nobel Prize Foundation didn't want to have a similar talk again. So it was unclear how Gordon Tullock would behave while James Buchanan, he was a Southerly gentleman, and everybody knew that he would behave in the appropriate way.

VEDANTAM: You know, as we've been talking, I'm realizing how complicated this field is because, in some ways, you are trying to manipulate people by giving them an award. At some level, you are trying to shape human behavior. You're trying to recognize people who've done great work. You're trying to inspire other people. But you're also trying to do it in a way that doesn't feel controlling, which doesn't feel like you're actually manipulating people. So a good award inspires people and communicates sort of the norms of the organization without necessarily feeling heavy-handed even though it actually may have been designed, you know, in a fairly heavy-handed manner. There's a real paradox and tension there.

FREY: Yes, indeed, yeah. It's difficult to give good awards because one might also run the danger that one gives it to people who do not earn it or deserve it. And that's very bad for an award if it's given to people who didn't deserve it. And that's, of course, very bad for the giver of the award because it's no longer going to the right people.

VEDANTAM: You know, you've talked at various points, Bruno, about how money is not a very good reward. In one of the early episodes of HIDDEN BRAIN, we interviewed someone who worked at a company. This person had an interesting idea. Rather than give out cash awards, the person essentially set up - this was the owner of the company - set up a little fund where any employee could give any other employee a cash award. And the benefit of doing this is the employee who was giving out the award not only could give out an award for good behavior or work well done or exceptional service but also had to write up why they thought the recipient deserved the award. So in some ways, it solidified the - both the giver as well as the receiver sense of why the award was being given. Do you think that's an effective way to use money as a motivational tool?

FREY: That's very interesting, indeed. I think this goes very much in the direction of awards, namely that one expresses exactly why somebody gets this additional amount of money. One really has to think in a more social context. And I think this idea of handing out money in this way is interesting and certainly goes in the right direction. But I would argue that the same would be the case if employees could give other employees awards.

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VEDANTAM: I want to end this discussion about awards by talking about someone who dissed the world's most famous award. When the Nobel Committee awarded Bob Dylan the Nobel Prize in Literature, he simply ignored them. The comedian Tim Heidecker composed this very Dylan-esque (ph) song.

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TIM HEIDECKER: (Singing) Well, I don't need your prize, babe, I don't need your prize. Just look into my eyes, babe, see how I despise the prize, see how I despise the prize.

VEDANTAM: So, Bruno, what happens when someone rejects an award?

FREY: I think even worse is not to react as Bob Dylan did. That is the worst thing. To at least reject it is a reaction. Something happens. While to just say, oh, whether I get the Nobel Prize or not is totally irrelevant, that is the worst thing.

VEDANTAM: So when someone like Bob Dylan rejects a prize like the Nobel Prize, is it fair to guess that rock singers are unlikely to get the Nobel Prize in Literature going forward?

FREY: Yes, I think that's very unlikely. And, of course, the committee first talks to potential recipients and informally asks them whether they would accept the prize. And that is now the common procedure, that important prizes are not just given. One talks to people before whether they would accept it, and when they say no, it's not revealed that they were chosen as possible recipients.

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VEDANTAM: Bruno Frey is a professor and economist who has spent years studying how prizes and awards shape human behavior. He works at the University of Basel in Switzerland. Along with Jana Gallus, he is co-author of the book "Honours Versus Money: The Economics Of Awards." Bruno, thank you for joining me today on HIDDEN BRAIN.

FREY: Shankar, I thank you very much. It was a great pleasure.

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VEDANTAM: This week's show was produced by Thomas Lu and edited by Tara Boyle and Jenny Schmidt. My team includes Rhaina Cohen, Parth Shah and Laura Kwerel. Our unsung hero this week is Sarah Knight. Sarah works on NPR's research team where she scours the archives and the Web to help us fact-check our work, including this episode. Thank you, Sarah, for your amazing sleuthing skills.

If you like this episode, please share it with a friend and help them subscribe to our show. I'm Shankar Vedantam, and this is NPR.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.