Which Motivates Better: Financial or Tangible Incentives?
Which is more motivating, a financial incentive or a tangible one? Over at Predictably Irrational, Dan Ariely points to an experiment by Goodyear tires to find the answer. The company divided its sales team into two groups, giving one financial incentives and the other tangible incentives of equal value. I’ll let Ariely (at least I assume it’s Ariely writing) take it from here:
The results were very interesting; it turned out that the tangible-reward group increased sales by 46% more than the monetary-reward group. They also improved in terms of the mix of products sold by 37%. One explanation, and it seems to me a fairly good one, is that we can visualize tangible rewards (imagine yourself on a Hawaiian beach), which creates an emotional response. Money, on the other hand, is not accompanied by images as often (aside from maybe Scrooge McDuck swimming in piles of it), and lacks the emotional pull that tangible rewards have, so they’re less effective in motivating employees. I guess it’s called “cold, hard cash” rather than “future beach vacation cash” for a reason.
Hi, I'm 
cool
also i heard from yahoo answers dudes that originally they were paying people for answers but it didn’t work well – but when they replaced it with points that had no value at all it blew up.
i think because social incentives are even more powerful than tangible ones.
This is cool. I have always found that as humans we don’t have a good estimation of numerical value once they get large. We can’t connect them well to how that numerical value translates to life value. For instance when I hear “Car crash kills 1″ I feel terrible. If I hear “Terror attack kills 100″ (and I’ve heard many in my life) I feel terrible. But if I heard “Terror attack kills 500″ I don’t feel any more terrible than when 100 people died. Maybe I’m an insensitive cold heart but I can’t feel the difference. But when I see a movie on the holocaust or terror in India, those individual stories help me estimate the scale of it all.
I’m curious how the Goodyear people decided what the tangible benefits would be. I could imagine a major swing in motivation. The most expensive wine in the world wouldn’t motivate me as much as the amount in cash.