Why Do People Work Hard When They Have No Economic Incentive To Do So?

Let’s play a game. I will name two forms of football and you tell me which you think offers better incentives to players. On the one hand is soccer, the world famous sport which receives huge funding from sponsorship, merchandise and ticket sales. This allows large investment in the sport and the ability to pay good (sometimes even exorbitant) wages. On the other hand is Gaelic Football, played only by Irish people mainly in Ireland. Unlike soccer, it is an amateur sport and none of its players get paid. All athletes must also have full time jobs, meaning they can only train in the evenings after work.

This should be obvious. Soccer can provide a livelihood at basic and huge wealth at best. Skill is rewarded and teams fight with each other to entice the best players with generous salaries. Gaelic football does everything it can to suppress market forces, even forbidding the transfer of players from teams. It’s obvious that people respond to incentives, so the best players will naturally be drawn to where their skill is best rewarded. It’s crazy to think that people will put in the necessary investment of time and effort without proper economic incentive, that was revealed as nonsense with the collapse of the Soviet Union and a dozen other examples first year students learn in their first economics lecture. Both forms of football are broadly similar, so there are no large barriers stopping people from switching sport (soccer is probably one of the easiest sports to pick up). Surely Gaelic football is just another traditional feature that was good in its day, but couldn’t withstand the tide of market forces. Right?

Gaelic Football

Gaelic Football

Contrary to what you would expect, Gaelic Football not only survives, but it thrives, while soccer in Ireland is embarrassingly small. Every village in Ireland (and many places too small to be even called a village) has its own Gaelic football club (and a hurling club too, a similar traditional Irish sport that is also amateur). Enormous numbers of young people take up the sport every year far outpacing all other sports. On the other hand there are few soccer clubs outside the cities and even most schools don’t even have a team. Every summer, more than 80,000 people cram into Croke Park for the All-Ireland Football Final, which is more than the Super Bowl, basketball or baseball games and rivals even top English soccer matches (despite the massive population differences). The whole All-Ireland Football Championship has an average attendance of 19,000. In contrast the FAI Cup (the top soccer championship) Final had an attendance of 17,000 while the League of Ireland has an average attendance of 1,800 for its games.

How does this happen? How are people so blind to incentives? Why would someone willing ignore a career that rewards their skill and choose one with literally no economic reward. The belief that people respond to economic incentives is one of the key economic teachings hammered into the heads of economic students. Asking an economist to imagine a world where people didn’t respond to incentives is like asking a theologian to imagine a world without God, both shudder at the thought and insist it would be a chaotic world where their jobs would be meaningless.

So much of economic theory is based on the idea that people respond to incentives, the key ones being profit and wages. Many economists will tell you that the reason capitalism is successful and we all have such high living standards is because it is able to incentivise people, whereas other forms like socialism, give people no reason to produce, so they don’t. There is even a whole industry of pop economics books built around taking ordinary situations and examining what economic incentives apply. Most economic debate revolve around this, many people claim that if the rich are taxed too high, they won’t innovate or use their skills which will harm society. If wages are too high (through unions or a minimum wage) then businesses will have less incentive to hire people. The key belief is that to get people to work and be productive, you have to use money to incentivise them.

But if you think about it, this doesn’t make sense. The simple fact is that most people’s income is unrelated to their productivity. Most people are paid a fixed salary based on how many hours they work, not how much they produce. Their wage is set in advance and they receive it regardless of how much or little effort they put in. In the vast majority of jobs, it is not possible to measure an individual’s productivity or even monitor if they are doing their job. Furthermore, most jobs pay a wage based on the tasks of the employee, even though it is obvious that not everyone will do the task equally well. There is only the weakest relation between what workers give in productivity and what they receive in wages.

Think about the typical worker in a school, pub, hotel, office, shop etc. They get a fixed hourly salary regardless of how much work they do, so why do they work at all? Their wage is the same where the shop as busy as it is when empty, when they have clients and when they have none, when they smile at the customers and when they don’t. An office worker who spends all day browsing the internet gets the same wage as one whose nose is against the grindstone. So why don’t they just simply do the minimum to avoid being fired?

All of this is even leaving aside people who volunteer and work for little or no economic reward. To use another personal example, although my degree and work experience is in economics and finance, I’ve recently moved from Ireland to Slovakia to work as an Esperanto volunteer which certainly doesn’t make sense from an economic point of view (and maybe some other ones too).

Part of what got me thinking about this is the launch of YouTube Red, the introduction of voluntary charges for YouTube. Part of the justification is that some of the fee will go to content creators which will motivate them to create more content. However, an obvious problem is that YouTube already has an enormous number of people who spend thousands of hours over months and years creating content for little reward. Most even do it for free and few receive more than a pittance. Take this blog as another example. In the three and a half years I have been blogging, I have written more than 300 posts, all of which take several hours, usually half a day and sometimes even several days. But why? Where is my incentive? I don’t get a cent from it, it doesn’t advance my career (if anything employers would be less likely to hire an Atheist who wants to raise taxes). Why do I put so much work into something without any tangible reward?

For most of my life I have been (usually condescendingly) told that while left wing politics sound good on paper, in reality they all fail because they don’t give people an incentive to work. With a metaphorical pat on the head, I would be told that people won’t work hard unless they are rewarded. Paying everyone the same wage (from socialism or high taxes) removes the incentive and turns us all into lazy dossers. But how is capitalism any different? Where is the incentive if even Capitalism doesn’t pay based on productivity?

So if people don’t have an incentive to work hard and get paid the same regardless, why does anyone bother? Why doesn’t everyone just do the bare minimum while the boss is looking and then doss off the rest of the time? Some people probably do, but most people work hard, harder than they need to. Part of it is human nature, working is part of our identity, it’s what we do. People would work even if they didn’t need to or didn’t even get paid, the fact is, it gives their lives meaning and/or helps others would be enough. People want to do a good job.

Let’s end where we began, why are Gaelic Footballers so determined despite not receiving any reward? Gaelic football is about more than money, at heart, it’s about pride. It’s about being proud of your hometown, your home county and making them proud of you. People play for their local club, with the people they grew up with, on their home soil. It’s about who you are and where you come from. Not only are the players not paid, but there is no support for paying them, even among players, as people feel this would cheapen the sport and replace its spirit with money. The economic incentive of a fat bonus pales in comparison with the pride and passion of representing your home.


Filed under Economics

17 responses to “Why Do People Work Hard When They Have No Economic Incentive To Do So?

  1. In the vast majority of jobs, it is not possible to measure an individual’s productivity or even monitor if they are doing their job.

    -You just answered your own question about why capitalism doesn’t pay perfectly based on performance.

    So why don’t they just simply do the minimum to avoid being fired?

    -They don’t? And the labor market’s been sluggish recently, so while it’s more difficult to get fired, it’s also more difficult to get hired. I think most people work hard to avoid getting fired.

    There is only the weakest relation between what workers give in productivity and what they receive in wages.

    -Not true. A CEO contributes much more to the fate of a company than a typical worker, for example.

    Where is the incentive if even Capitalism doesn’t pay based on productivity?

    -Imperfect relation of pay of performance is not no relation of pay to performance.

    It’s about being proud of your hometown, your home county and making them proud of you.

    -And that’s not an incentive?

    You’re like David Friedman, if David Friedman was a non-doctrinaire communist. I see a lot of wasted talent here. You’re really good at this low-level meta-analysis (I don’t know how good I am), even better than Scott Alexander or maybe even David Friedman is, but I haven’t seen you go into the high-level meta-analysis Scott Alexander has.

    How much money would you be willing to accept, if you were paid to stop blogging? How much money would the Gaelic football players accept, if they were paid to stop playing Gaelic football? Somehow, I think the amount would be less than infinity.

    My incentive in blogging and commenting is to affect the world around me and I would accept $150,000 per year to stop blogging. $250,000 per year to stop commenting, as well. Discount rate 4%.

    I’ve recently moved from Ireland to Slovakia

    -Great! You could ask people there how the incentives under oligarchical socialism were like.

  2. Also, perfectly on-topic post by Scott Sumner. That guy’s good!:


  3. Ah, your critic makes some fine, albeit specious points above. I don’t know whether it is worth the time to refute them, though. The research on incentives is quite robust. But every “scenario” used to illustrate a point can be seen quite differently by different people. Consider the employer who decided that his least well-paid employee would be boosted to US$70,000 per year. Others would be given commensurate raises. The results so far is the rates of productivity increase have doubled (papers have falsely stated that productivity doubled) and labor turnover has decreased substantially. The owner decided to pay for this by reducing his salary of over a million per annum to $70,000. Now “pithom” would probably rack this up to “motivated by money.” I, on the other hand, would rack this up to loyalty. The boss says he will take care of you and voila, he does, then we need to take care of the boss.

    It wasn’t as it none of his employees weren’t withing sniffing range of US$70,000, many were already over US$50,000 in annual salary. The boss in this case made a commitment to his employees, a statement that said, I am not just in this for what it does for me personally. I include my employees in my circle.

    You are oh, so , right that money is not the sole motivator of employees. Certain jobs are rife with people motivated otherly: teachers, police, social workers, etc. This does not mean money is not important, but that money is not the sole determinant of employee behavior. Consequently, the anti-socialists/anti-communists are arguing very simplistically about there being no lack of motivation because all are paid the same. And using Soviet Russia as an example is not acceptable. Talk about a complex system that was not really socialist or communist, just as ours in not solely capitalist.

    • I say the employee response in this case was 2/3 due to money, 1/3 due to everything else. Had Dan Price made the minimum salary $40000 or something like that the response would have been less impressive.

      Anyone who specializes in early childhood education either cannot be qualified for a better job or is not doing it for the money. I think it’s a combination of both. But you could still incentivize these people to not be teachers to small children with $.

      “This does not mean money is not important, but that money is not the sole determinant of employee behavior.”

      -I don’t think anyone denies that.

      “And using Soviet Russia as an example is not acceptable.”

      -Uh, yeah, it is. In fact, it’s strongly advisable. East Germany, Soviet Russia, Czechoslovakia and northern Yugoslavia were by far the most successful examples of real-world state socialism (not the sort of regulated welfare-state Capitalism you find in Sweden, France, and Spain). These offer really interesting examples in incentives completely unlike U.S. ones -in Soviet Russia, for example, a factory worker could make the same as an SOE Vice-President, and the skill premium was often negative, on the basis that paper-pushing was easier than factory work. Using North Korea or Madagascar or Ethiopia would be mostly irrelevant, though, as these are former Communist states furthest in resemblance to the West.

  4. Perhaps instead of saying people act to maximize economic gain, it might be more accurate to say they act to maximize personal satisfaction.

    Each person gets satisfaction from different sources. The well-paid banker might get satisfied with material comfort. Blood donors get satisfaction from showing his/her peers how generous they are. The educated immigrant parents who take a lower-paying job in North America get satisfaction from giving a good future for their children. The liberal arts student with dubious career plans gains satisfaction from fulfilling their curiosity. The Gaelic footballers get satisfaction from gaining bragging rights for their hometown. I write long comments because I get satisfaction from proving to people that I’m right.

    A society’s goal should be to maximize personal satisfaction, or in other words, help people do what they want to do.

    Economists have probably explored these problems already. “Incentives” are things that increase satisfaction. Ideally we would measure the level of satisfaction of each individual, but that’s hard because it’s psychological. Perhaps the surveys of happiness is an attempt to measure that.

    Why does it seem like for economists the only incentives are money? I think it’s because it’s the easiest and best proxy for satisfaction. Money is easy to measure. Businesses and governments keep records of money. Money can buy a lot of things that bring satisfaction. Money is can be added, subtracted, divided, and multiplied, but a 5 out of 10 in happiness can mean a different thing in Costa Rica or in Japan.

    Taking satisfaction/happiness as the goal also implies that there are other ways to achieve a “developed” society. You can encourage people to want less. This flies right in the face of economics along with its centuries of research. Perhaps this is also why the economics of happiness is not so popular.

    • Bingo, pancen. Thanks for clarifying the issues. But can you successfully encourage people to want less over a period of years? That would be very interesting, if true.

      And, yes, interpersonal utility comparisons have always been a highly contentious issue in economics.

    • E. Harding

      pancen: great comment. Interpersonal utility comparisons have long been a contentious issue in economics. Can you really successfully encourage people to want less over a period of years, though? I’d like to see some research on that. It would be really interesting, if true.

  5. E. Harding

    To our host: am I banned? I can’t seem to respond (largely laudably) to pancen’s comment. I was also banned accidentally (by program) on Slate Star Codex for posting too many links. Can you please check your spam filter? I hope I was not banned for simple disagreement.

  6. E. Harding

    What’s going on? I can’t seem to comment?

  7. Consider the following study, published in the Journal of Personality and Social Psychology, by Michael Kraus of the University of Illinois at Urbana–Champaign and Dacher Keltner of the University of California at Berkeley. The study conducted experiments to examine how participants interpret their social status or class relative to that of others. These are some explanations of their results:

    “Apparently if you feel that you’re doing well, you want to believe success comes to those who deserve it, and therefore those of lower status must not deserve it.”

    “Upper-class people are more likely to explain other people’s behavior by appealing to internal traits and abilities, whereas lower-class individuals note circumstances and environmental forces.”

    Matthew Hutson, a science writer in New York City, commented on the study by saying,

    “But say you’re in that top 0.01 percent—or even the top 50 percent. Would you want to admit happenstance as a benefactor? Wouldn’t you rather believe that you earned your wealth, that you truly deserve it? Wouldn’t you like to think that any resources you inherited are rightfully yours, as the descendant of fundamentally exceptional people?”

    As such, while the rich may justify their ‘success’ as solely the result of their hard work, and the poor justify their ‘failure’ as the result of circumstances, the truth may be here and there.

    Let me put it this way:

    If all we ever become is due only to us, then what is scripture calling us to be thankful for?

    “Thanks be to God for his indescribable gift!” (2 Corinthians 9:15)

    “And when your Lord proclaimed: If ye give thanks, I will give you more; but if ye are thankless, lo! my punishment is dire.” (Quran 14:7)

    And, if all we are is in no way due to us, then what basis is there for judgment day?

    “Whatever you do, work at it with all your heart, as working for the Lord, not for men.” (Colossians 3:23)

    “Thou, verily, O man, art working toward thy Lord a work which thou wilt meet.” (Quran 84:6)

    Again, the truth is here and there; it is due to us and the circumstances that accompany us.
    For an interfaith perspective, please follow my blog at:

  8. Sebastien

    If money is not an incentive I don’t see the point of offering a better wage to my employee.

    From my experience most people do the bare minimum at work, I have seen this in my home country and everywhere I’ve traveled. I’ve seen worker paid 45$ an hour taking 2h lunch break and not really working the rest of the time. Same in Cambodia with a 2$ a day salary.

    For me a low wage was a great incentive to look for better job elsewhere, some people choose to stay at low paying job all their life.

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