What inspires children to do their chores or adults to go to the dentist? Habit, yes. Fear, sure. Bribery — or incentive, depending on how you frame it — also helps. Managers can take a page from this playbook, too.
Let’s face it. Most of us procrastinate. Even when we want something (or know it’s the right thing to do), the temptation is always to wait for next Tuesday. Or never.
What inspires us to get off our chairs?
Researchers who study human behavior are producing some interesting answers for managers and policy makers alike — involving bribes and deadlines — that could boost public health and make smart companies some serious money.
On the health side of the ledger, Esther Duflo and Abhijit V. Banerjee, co-founders of the Abdul Latif Jameel Poverty Action Lab at MIT, design randomized control trials of development projects in poor countries to figure out what actually works. The most successful projects, they have discovered, take the all-too-human tendency to procrastinate into account.
In their new book, Poor Economics, Duflo and Banerjee recount an experiment designed to raise the atrocious immunization rate (roughly 6%) in a section of Udaipur, India. Parents in this area received information about the benefits of vaccines, but they also had a superstition that taking young children outdoors ran the risk of them catching the “evil eye.” It was easier not to go, especially when immunization involved walking to a clinic — which might be closed, due to frequent nurse absenteeism — and then just dealing with the unpleasantness of a shrieking baby.
“Our natural inclination is to postpone small costs, so that they are borne not by our today self but by our tomorrow self instead,” Banerjee and Duflo write. As Duflo points out in an interview, “it’s not only the poor who are like that. All of us are like that.”
So Seva Mandir, a local non-profit, tried two tactics. First, the group established immunization camps held monthly on the same date, like clockwork, which the villagers knew would be staffed. This raised immunization rates some. But what really pushed up rates — roughly sevenfold — was giving parents 2 lbs of dal (dried beans) every time they took kids in for their shots. In other words, giving people a bribe and a time-sensitive deadline (today is the day this month!) conquered procrastination.
If you think about it, this is roughly the same model that has powered Groupon’s wild success. We may have a weak desire for various products and services offered by local merchants. What makes us actually buy? How about a 90% discount you are unlikely to see again in the near future?
“We work really hard to make sure these really are unbeatable deals you can’t get somewhere else,” says Julie Mossler, Groupon’s spokeswoman. A deep discount acts as a bribe, and Groupon’s time-sensitive model (deals are only good for 24 hours, or until they sell out) also gets people off the fence. No wonder Groupon has grown to 70 million subscribers in two and a half years.
Other businesses aim even more for the time-sensitive side of the equation. Lot18 sells “epicurean products” (mostly wine) to members who join by invitation. Discounts run 10-50% on a curated selection of items.
But what really motivates buyers, says co-founder Philip James (who studied behavioral psychology in business school), is scarcity. A winery might release 50 cases (600 bottles) of a highly desired wine, and with 200,000 members, these can sell out in hours.
What happens when a wine sells out?
“We leave it up, to show people it sold out,” says James. “The psychological underpinning is loss aversion.” Members only need to be burned once. Then, “If they see something they like, they quickly learn to act quickly.”
Bribes and deadlines aren’t fool proof — elections tend to happen on a certain day, and many of us skip them — but they offer an interesting thought experiment for all kinds of situations.
So how does this apply in the workplace?
What if your employer paid you $50 every time you went to the dentist? What if HR arranged for a mobile dentist clinic to come to the office — but only one day a month (with capped capacity)? Would you make an appointment under those circumstances?
Maybe not. But you’d be more likely to do so than you are without incentives.
To be fair, bribes and deadlines certainly aren’t new. Car dealerships have long run “Today only, you pay what we pay!” advertising campaigns.
But these days, “Behavioral science is really providing new insights in how best to tailor incentives,” says Ian Ayres, a professor at Yale Law School, author of Carrots and Sticks, and a co-founder of Stickk.com, a site that allows users to set up commitment contracts with fines (reverse bribes — but which operate on a similar principle) and deadlines to tackle personal goals.
The Web also allows businesses to personalize incentives for different customers. According to Ayres, Stickk.com has worked with Staples (SPLS) to set up incentive programs for small businesses to achieve certain goals (starting to use QuickBooks, creating a more environmentally friendly office, etc.).
“They realized that one barrier that Staples customers have to purchasing is procrastination,” he says. Deadlines and rewards — in the form of Staples points, or being entered in a drawing to win a laptop — got customers moving.
“Incentives can push individuals to take some action that they themselves consider desirable but perpetually postpone taking,” Banerjee and Duflo write. That’s true if the action is getting children immunized — or trying that new restaurant (at 60% off!) that just opened downtown.
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