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There’s no such thing as financial incentives

An observation so obvious 🤦‍♂️.
One thread through these posts is the idea of Jobs-To-Be-Done, that what we really want are quarter-inch holes and we drink McDonald’s milkshakes to stave off boredom (pre-podcasts at least). Incentives for action also depend on the JTBD, something Nobel Prizer winner Esther Duflo noted to Tyler Cowen:

“The traffic ticket, I think, is much more than the financial incentive. If you get stopped by a traffic officer, you lose your car right this instant. I think that it’s likely inconvenience is much, much bigger. The point that we are trying to make is not that people are not sensitive to incentives, because we can always construct incentives. If you construct the incentive boldly enough, then it’s almost always true.”

Duflo goes on to say that we probably overrate the effect of financial incentives because we don’t consider them relative to something. “People seem to be pretty inelastic to receiving money for sure that doesn’t lead them to go on vacation.”

This came up with my daughter whose neighbor based babysitting and dog-walking business has been booming (with an assist from dad). Between her complimentary rooming and board, she has no need for any additional money. Books come from the library, music from Amazon, and clothes and makeup are non-issues.

She has no JTBD, so she has no financial incentive.

Like businesses focus on JTBD for their customers, we can focus on the JTBD of the people in our lives. At the margin, evidence from Silicon Valley suggests employees would trade some salary for better work conditions. Work is more enjoyable, hence better, if we like the people we work with.

 

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