The Hidden Cost Of Rewards

When you consciously reward someone, you do so with the purpose of reinforcing certain behaviors or attitudes. This is especially true when it comes to children. However, there are hidden costs to using rewards to influence behavior. If you use reward-based motivation, you end up undermining the person’s inner motivation for the activity they are engaged in. 

This concept tries to explain why people are more creative when they draw and write for fun (intrinsic motivation or IM) than when they do it for a reward or financial gain (extrinsic motivation or EM). In other words, it is a paradox. Here, external rewards reduce motivated behavior.

Intrinsic and extrinsic behavior

To explain the impact of the hidden cost of rewards, we need to understand the difference between both types of motivation. Intrinsically motivated behavior is what we do spontaneously for pleasure or personal interest. These are things we do in the absence of any kind of reward, incentives or external control. Consequently, these activities are not something we do to achieve anything else. They are worth doing in themselves.

On the other hand, extrinsic motivation comes from incentives and consequences from the external environment. It comes from a behavioral contract that says “do this” (required behavior) and you will receive “this” (conditional premium).

At first glance, behaviors may seem intrinsic or extrinsic. But the fundamental difference between the two lies in the source that activates and controls the behavior. With intrinsic motivation comes the motivation from the spontaneous satisfaction of the psychological need that the activity provides. With extrinsic motivation, it comes from the external stimuli and consequences.

Disorders in learning

People give rewards because they expect it to increase motivation and behavior. But when you give a reward, this extrinsic prize will disrupt the learning process. It also gets in the way of autonomous self-regulation. This is one of the hidden costs of reward.

Imagine if parents always rewarded their children with money to get good grades. After this happens several times, the child will just want to remember information to pass. In other words, they will not feel intrinsically motivated to have a conceptual understanding of the material. Instead, they will study to get something in return.

In basic terms, forcing or excessive motivation through rewards can trigger a change in the weight of the reasons for performing the task. This is true even when the reward is very attractive (such as money). The reasons change from being related to autonomy to being related to the environment (Deci et al, 1999).

Expected and material rewards

Expected rewards weaken intrinsic motivation. Unexpected rewards, however, do not. The hidden costs of reward are more or less highlighted depending on the nature of the reinforcement.

Material rewards exercise a form of control over behavior. Examples of this are money, prizes and trophies. We often use them in different contexts (family, work, school) to encourage people to do things they would not do otherwise.

According to many studies , unexpected and unconditional material rewards do not negatively affect internal motivation. They neither increase nor decrease IM. Remember that the latter are the benefits that a person receives regardless of their performance. Rewards that are conditional on participation, completion, and accomplishment, however, reduce the motivation itself.

When is external motivation positive?

There are certain situations where external motivation works well. In these cases, there are no hidden costs. In other words, there are exceptions where motivation, consequences and external rewards are beneficial. We are talking in particular about the activities that have a very low inherent attraction in and of themselves.

Examples of this type of activity are recycling, energy saving, compliance with traffic laws, or getting senior citizens to participate in physical activity. In all of these examples, it is fruitful to reward good behavior. If we do not reward this behavior, people will  not  actively engage in it.

As you can see, there are always two ways to enjoy an activity. Let’s say you play an instrument because it’s fun. You spend time doing it because you want to develop your skills. In that case, you do it because of your own motivation. If you do it because it is an opportunity to earn money, prizes, trophies or to impress others, then external motivation is present. Who do you identify with? One, the other, or both?