Motivational crowding out

What is motivational crowding out?

Motivational crowding out occurs when an external intervention weakens an existing internal or social reason for acting. A reward, penalty, or rule may change what an activity means to the person. This is the crowding out effect in motivation research.

Which crowding out effect?

In macroeconomics, crowding out commonly refers to government borrowing or spending displacing private investment. Penn Wharton's explanation of capital crowding out covers that question. Here, the question is different: does an incentive weaken a reason someone already had for doing something? One concerns investment; the other concerns motivation.

Intrinsic motivation and external incentives

Frey and Jegen’s motivation crowding theory allows external interventions to weaken or strengthen intrinsic motivation. An incentive’s direct effect and its effect on existing motivation can operate together, so weaker intrinsic motivation does not necessarily mean lower total performance.

Control or support?

One hypothesis in motivation crowding theory concerns how an intervention is understood. If it feels controlling, it may reduce a person's sense that the activity is their own choice. If it communicates support or recognition, it may strengthen that sense instead.

For a hypothetical example, imagine someone who enjoys volunteering. A new supervisor begins paying small bonuses while closely policing every minute and threatening to withhold payment. The volunteer might start interpreting the work as an obligation to satisfy the supervisor. Compare that with help obtaining supplies and recognition of work the volunteer chose to do. The theory directs attention to those perceived meanings; it does not establish that a particular bonus or supportive phrase will produce a fixed result.

Example: the daycare fine

In Gneezy and Rustichini’s daycare field study, introducing a fine increased late pickups, and removing it did not reverse the increase during the study. The authors proposed that the fine changed parents’ understanding of the arrangement.

One interpretation the authors discussed was a shift from a favor to a purchasable service. Before the fine, parents might regard a teacher staying late as generosity they should not abuse. Once a price was attached, they might regard extra care as something they could buy when needed. That would change the meaning of arriving late, not merely add a cost to an otherwise unchanged decision. The authors also discussed another possibility: the fine supplied new information about what arriving late might cost. The study did not distinguish between these explanations.

Evaluating crowding out

The daycare result does not establish that all fines backfire or isolate a single psychological mechanism. For wages, volunteering, grades, blood donation, or environmental rules, examine what the intervention means to the people affected rather than assuming the same result.

To evaluate an incentive, distinguish behavior while it operates, behavior after its removal, and measures of underlying motivation. A short-term increase or decrease alone does not establish motivational crowding out.