Monday, August 25, 2008

"Financial Incentives Trump Social Networks"

A bit of a retort to an earlier post that money undermines community. It apparently makes the community more productive as well (Slate). Economics researchers work with a farmer to improve strawberry picking productivity at a farm with a series of interesting experiments like the following (read the whole thing):

  • The researchers found that managers tended to do their friends favors by assigning them the easiest rows. This made life comfortable for insiders but was unproductive since the most efficient assignment for fruit picking is for the best workers to get the best rows. The researchers responded by linking managers' pay to the daily harvest. The result was that managers started favoring the best workers rather than their own friends, and productivity rose by another 20 percent.

  • "They proposed a "tournament" scheme in which workers were allowed to sort themselves into teams. Initially, friends tended to group themselves together, but as the economists began to publish league tables and then hand out prizes to the most productive teams, that changed. Again, workers prioritized money over social ties, abandoning groups of friends to ally themselves with the most productive co-workers who would accept them. In practice, that meant that the fastest workers clustered together, and again, productivity soared—by yet another 20 percent."
I suspect a number of these experiments would have direct applicability to just about any low skilled labour job.

No comments: