{"id":837,"date":"2008-09-17T14:29:13","date_gmt":"2008-09-17T21:29:13","guid":{"rendered":"https:\/\/www.scotthyoung.com\/blog\/2008\/09\/17\/why-good-deeds-and-money-dont-mix\/"},"modified":"2018-04-04T03:00:11","modified_gmt":"2018-04-04T10:00:11","slug":"why-good-deeds-and-money-dont-mix","status":"publish","type":"post","link":"https:\/\/www.scotthyoung.com\/blog\/2008\/09\/17\/why-good-deeds-and-money-dont-mix\/","title":{"rendered":"Why Good Deeds and Money Don’t Mix"},"content":{"rendered":"

\"CorporateSuit.png\"<\/a><\/p>\n

Would you rather serve soup at a homeless shelter for free, or for $2 per hour?\u00c2\u00a0 If you\u2019re in a country with a high minimum wage like Canada, you would probably rather volunteer.\u00c2\u00a0 For the same reasons, your mother-in-law would be offended if you offered to pay her $20 for making a family dinner.\u00c2\u00a0 I think most people intuitively understand this, but until recently I hadn\u2019t heard of a good concept to describe why this happens.<\/p>\n

I recently had a chance to read Dan Ariely\u2019s bestselling book, Predictably Irrational<\/a><\/strong>.\u00c2\u00a0 Ariely is a behavioral economist at MIT, and the book is a great introduction to the area of human biases, or the non-random stupid mistakes people make.\u00c2\u00a0 Although the book covers a number of irrational mistakes, by far the most interesting chapter is Ariely\u2019s description of how we have two different, yet equally powerful, sets of rules in our head for how to behave.<\/p>\n

Social and Market Norms<\/h2>\n

It seems that people have two powerful, but completely separate, sets of rules for how to behave.\u00c2\u00a0 One of these sets is market norms.\u00c2\u00a0 This is the domain of money and formal transactions.\u00c2\u00a0 The other realm is social norms, the domain of gift-giving and volunteering.<\/p>\n

The reason, according to Ariely, that you would volunteer at a homeless shelter for free, but not for $2, is simple.\u00c2\u00a0 When you volunteer, you are using social norms.\u00c2\u00a0 In this game, time you donate is not exchanged directly for money.\u00c2\u00a0 Instead, it is exchanged for goodwill from people around you, a feeling of satisfaction and personal pride.<\/p>\n

However, as soon as you throw a dollar amount into the mix, the transaction switches from social norms to market norms.\u00c2\u00a0 Now, instead of goodwill and satisfaction, your time is exchanged for the rate of $2\/hour.\u00c2\u00a0 What was once a good deed, now becomes a bad deal.<\/p>\n

What was interesting about Ariely\u2019s discovery isn\u2019t that market and social norms exist, that\u2019s fairly obvious.\u00c2\u00a0 Instead, it is that these domains are like oil and water: they don\u2019t mix.\u00c2\u00a0 As soon as a payoff with a known dollar value was introduced into the transaction, people\u2019s behavior differed dramatically.<\/p>\n

In one experiment conducted, Ariely had participants drag circles on a computer screen.\u00c2\u00a0 In one group, cash was offered as a reward.\u00c2\u00a0 In another group, it was presented as a social request.\u00c2\u00a0 Within the group offered cash, some sub-groups were paid more than others.\u00c2\u00a0 Although the social group performed fairly high for nothing, the performance of those working for cash was largely based on how much they were paid.<\/p>\n

Social Norms Aren\u2019t Perfect<\/h2>\n

I think there is a tendency to assume that if everything reverted to social norms, the world would be a better, more community-oriented place. The open-source movement, families and volunteerism are all rooted in social norms.\u00c2\u00a0 However, while social norms can work, they also have downsides.\u00c2\u00a0 Nepotism, popularity contests and unfair transactions are also a side-effect.\u00c2\u00a0 I believe the expression \u201cit\u2019s not what you know, but who you know,\u201d owes a lot to the influence of social norms.<\/p>\n

The key isn\u2019t picking one set of norms as being better than another, but understanding how things change depending on which set of norms you operate in.<\/p>\n

Why You Enjoy Work More When You Aren\u2019t Paid For It<\/h2>\n

I think one way to use this understanding is to be careful with the jobs you do for money.\u00c2\u00a0 Being directly paid for a task, pushes you into the realm of market norms.\u00c2\u00a0 The enjoyment for the task goes down, and the amount of money becomes more important to your happiness than other factors like learning new things, making connections and accomplishing something meaningful.<\/p>\n

Obviously it\u2019s not practical to avoid working for money.\u00c2\u00a0 We\u2019re not in a volunteer economy, and I don\u2019t think that is practical (or even desirable).\u00c2\u00a0 But it is an important part of human nature to consider when picking your side activities.\u00c2\u00a0 If you know you\u2019ll enjoy things more when there is no direct payment, you can factor that into deciding how to spend your off hours.<\/p>\n

I know personally, that I would never have started this blog if someone had been paying me directly.\u00c2\u00a0 The amount of revenue it brought in for the first 12-18 months couldn\u2019t justify the effort.\u00c2\u00a0 However, by disassociating my work with the money, it was fun to do, even when I wasn\u2019t earning a dime.<\/p>\n

Understanding Both Sets of Rules<\/h2>\n

I think most people would consider themselves a little more comfortable within one framework of rules than another.\u00c2\u00a0 But if you consider how important each of these sets of rules are, it\u2019s not an area of life you can specialize.\u00c2\u00a0 Fully understanding both sides, and the line that separates them, is the key to making sure you aren\u2019t abused by the other side.<\/p>\n

I see people who complain about shady business dealing, moving workers overseas or what they view as ruthless competition.\u00c2\u00a0 Perhaps part of the problem is that these people don\u2019t fully understand the market norms that are being played in that situation.\u00c2\u00a0 On the opposite side, I\u2019m sure you know people who complain about the lack of equality, how the popular often outrank the intelligent, or how fair deals are pushed aside for unfair reasons.\u00c2\u00a0 Perhaps the problem here is that these people don\u2019t fully understand the social norms being used.<\/p>\n

After reading, Predictably Irrational<\/a><\/strong>, I think the best way to win isn\u2019t to promote or justify one set of rules over another, but just to understand the two sets independently.\u00c2\u00a0 If you know what rules people use to make decisions, you have a better chance to succeed.<\/p>\n","protected":false},"excerpt":{"rendered":"

Would you rather serve soup at a homeless shelter for free, or for $2 per hour?\u00c2\u00a0 If you\u2019re in a country with a high minimum wage like Canada, you would probably rather volunteer.\u00c2\u00a0 For the same reasons, your mother-in-law would be offended if you offered to pay her $20 for making a family dinner.\u00c2\u00a0 I […]<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[681,658],"tags":[199,42,198,115,197,194,58,50],"class_list":{"0":"post-837","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-nc-mindset","7":"category-rationality","8":"tag-biases","9":"tag-book-review","10":"tag-market-and-social-norms","11":"tag-money","12":"tag-predictably-irrational","13":"tag-rationality","14":"tag-relationships","15":"tag-thinking","16":"entry"},"acf":[],"yoast_head":"\nWhy Good Deeds and Money Don't Mix - 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