Motivation crowding theory
Motivational crowding theory presents a counterintuitive look at the effect of external motivators – principally monetary incentives on actual performance. Much of economics is based on relative price effects, basically, the more you compensate a behavior, the more of it you will get.
Introduction
This theory considers two different kinds of motivation, external and intrinsic motivation. Intrinsic motivation is what makes the activity in question enjoyable in itself. This motivation includes enjoying the activity, pride and sense of accomplishments derived from the effort required to educate and enable oneself to do the task, and also altruistic motivation of being able to help others. These characteristics happen to also be the hallmarks of most medical professions, thus making Motivational crowding especially relevant in healthcare. The theory basically states that instituting external motivators like extra pay for better performance could actually diminish or “Crowd out” intrinsic motivation. If the effect of decreasing intrinsic motivation outweighs the relative price effect, then P4P could actually decrease performance.
History
One of the 1st to postulate this theory is Titmuss who argued in his 1970 book that financially compensating blood donors actually depresses willingness to donate blood. Consequently, most of the work in this area was done in psychology, documenting various demonstration of the theory in action. Recently, more work has been done to demonstrate the economic application of this theory.
Motivational Crowding in Healthcare
The relevance of motivational crowding in healthcare has only recently been recognized (see Wynia 2009). One thing to remember is that the introduction of financial incentives unleashes two opposite forces on performance; traditional price effects which pushes performance higher (pay enough for any task, even unpleasant ones, and you’ll get more effort for it), versus motivational crowding which diminishes intrinsic motivation and depresses performance. If price effects dominate, P4P will still increase performance, but not as much as might originally be expected. If motivational crowding dominates, then you will see an actual decrease in performance. The point is, you can mask the effects of motivational crowding by increasing the P4P incentives. What would be instructive is to compare performance pre P4P against performance post P4P if the incentives are eventually removed. If actual performance post incentives are lower than it was pre incentives, this might indicate significant motivational crowding effects. This theory has an interesting mirror effect. It postulates that some external motivators, if correctly designed, could actually “Crowd in” or increase intrinsic motivation. The overwhelming case evidence are for Crowding out, not for Crowding in, so it may be harder or trickier to design incentives that crowds in intrinsic motivation. This is a very interesting and potentially significant theory for healthcare. It is also relatively new; much further work on its implementation in healthcare could turn out to be very useful.
P4P
One of the more significant initiatives to use the newly available data and improve quality is the creation of Pay for performance (P4P) system. P4P seems logical, but findings from psychology provide possible counterintuitive perspective on the effectiveness of P4P.
References
- Deci, E. L., Koestner, R. and Ryan, R. M. (1999). A Meta-analytic Review of Experiments Examining the Effects of Extrinsic Rewards on Intrinsic Motivation. Psychological Bulletin, 125, 3, 627-668.
- Titmuss, R. M. (1970). The Gift Relationship. London, Allen and Unwin.
- Wynia, M. K. (2009). The Risks of Rewards in Health Care: How Pay-for-Performance Could Threaten, or Bolster, Medical Professionalism. J. Gen. Intern Med 24(7): 884-887
Submitted by: Edward Pesulima
