The Issue of Incentives

Money dangling on a fish hook

Do you ever wish there were a way to trick yourself into working smarter? That there were a method to take away all the madness by making smart work so enticing that there was just no way to escape it?

Well there is. According to Steven D. Levitt and Stephen J. Dubner, authors of Freakonomics, there are incentives behind everything, and the action with the greatest incentive becomes the action that actually happens. Since Freakonomics is founded on principles of economics, you might expect the authors’ definition of an “incentive” to be entirely based on money, but if you did, you’d be wrong. They present three types of incentives (and leave the door open for more):

  • Economic incentives (money, etc.)
  • Moral incentives (avoiding guilt, etc.)
  • Social incentives (being perceived a certain way by others)

Using these three incentives applied to, say your daily 9–5 job, you should be set on the path to increased productivity. If you’re productive, you’re more likely to keep your paycheck (and it’s more likely to grow); you don’t feel bad about not producing results; and your coworkers see you as an effective and admirable human being.

So why is getting stuff done efficiently still so hard?

Part of the answer probably has to do with a psychological phenomenon called time discounting. Time discounting is the “now is better” side of the economic principle of time preference, which describes an individual’s unconscious “weighting” of present or future rewards. Someone who time discounts puts more weight on things that happen in the immediate future. The study cited in this blog post estimates that something’s value can be discounted as much as 32% due to time discounting. That means that a time discounter would value getting $68 now the same as $100 a year from now.

Time discounting could very easily disrupt the incentives you have for working smart, getting stuff done now, and staying on top of things. Essentially, hard work pays off in the long run and laziness pays off now. Work is often hard, especially when it’s rewarding, and that discomfort may be a more powerful disincentive (because it is immediate) than the future incentives.

There are a few solutions to this. One of them is simply being aware of this time discounting phenomenon and making a conscious choice to weigh incentives absolutely, instead of with regards to time. This perception shift may even shunt you to the other side of time preference, where individuals value long-term payoffs more than present gains. However, changes in perspective take time, and between now and that shift, there are still a ton of things you need to get done. So while you’re working on rewriting your paradigm, set up an incentive structure with payoffs in the very near future.

Different people will respond to different incentives, but here are a few ideas for near-future incentives:


At the beginning of the month, set aside a lump sum of money you can afford to spare from your budget. Try to figure out what you’re spending on for-fun non-necessities and use that as your lump sum. Portion out a little for every 1–3 days. If you get everything done in those days the way you’re supposed to, you can use that portion however you want. If not, that portion gets added to a long-term savings plan. (This way you can’t really lose. If you do the work, you get a short-term incentive; if you fail, you’re helping yourself in the long run. Either way you’ll either change your behavior or your perspective—which will also change your behavior.)


If you work for someone else, you are being paid to accomplish certain things. If you’re not accomplishing those things, or at least working earnestly towards them, you are essentially stealing the money that is being set aside to pay you. If you respond well to guilt, put a little reminder next to your work area that says, “Laziness is theft.” This will become a more immediate disincentive for not getting your work done. (If guilt plummets you into non-productive despair, this tip is obviously not for you.)


It’s hard to create an immediate social incentive—relationships with others are quintessentially long-term things. So instead of a social incentive, you could give yourself a physical one. If you work diligently for 30 minutes straight, you can rest your eyes for 5 (you may want to set an alarm so you don’t fall asleep though). Or you may keep a stash of your favorite treat at work. If you do X amount of work, you get Y amount of chocolate chips (just don’t get too indulgent or the snacking will become its own problem). Or if you’re just trying to be smarter about how you manage your email, allow yourself an after-work nap if you kept your inbox under control during the day.

What other short-term incentives might you use?

Image by scottchan via

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