Our economy today is based on the premise that incentives matter. Either we want it or not, incentives do help increase or decrease our motivation in doing something. Experiments such as Gneezy’s study, for example, found that individuals adjust their behaviour in response to incentives. The more often or bigger incentives you can offer, the better they will perform their tasks. In fact, incentives are more than just a reward to motivate people doing things. It can also create a lifestyle habit that eventually can change one’s life.

How do you think incentives help develop a better life?

The following explanation could help you understand how incentives impact our behaviour change. Read on…

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Incentives can create a habit

Incentives can help you build a stock of behaviour – it can help you start. For example, you want to build a habit of not playing a game during working time. If you earn a reward each time you do not play games in the workplace, you will have stronger motivation to start the process and continue doing the good thing. Then, you eventually build up such stock of not playing a game behaviour. And even if the incentives are taken away, you will likely continue your behaviour of not playing a game.

Research from Uri Gneezy and team showed that paying individuals for a long-term goal such as not playing a game during working time pays off both in the short and longer run, even after the incentives are removed. The general rule is that incentives can help people start an activity, build up a habitual stock of behaviour, and hence influence long-term behaviour.

Incentives can help break a habit

Another significant benefit of incentives is that it can break your “bad” habit. For example, Higgins in his survey used incentives to encourage smoking cessation during pregnancy. Participants earned vouchers for biochemically-verified smoking abstinence. As expected, incentives reduced smoking in the short run. 12 weeks after discounting the voucher incentive, all women participated who were not incentivised to quit continued smoking. Meanwhile, 27 percent of participants who received an incentive to quit stopped smoking completely.

It concludes that incentives can help you stop your bad habit. If you are rewarded for not doing something that harms you, your brain and behaviour will be motivated enough to encourage good behaviour. And the incentive here can build your motivation and support you doing the good things which are building a habit and reducing your “bad” existing habit.

Upfront incentives could be helpful to the most fundamental behaviour change

What is upfront incentives? Upfront incentives are rewards that are given earlier before the requested action is finished. Thusly, upfront incentives will be beneficial to overcome a fundamental behaviour change if the cost is typically now and the benefit is in the far future. For example, if you are an impatient person who wants to see benefits immediately, making incentives front-loaded and not too far in the future will be worthwhile. Incentives given after a month of not playing a game per day will likely not be as effective as incentives given after a week of reaching the goal. However, if you prefer to see benefits far in the future after there is a visible impact, upfront incentives might not be necessary.

Incentives are helpful if you remove barriers

Gneezy explained that incentives will be useful to motivate your employees by removing barriers. For example, you offer Amanda to move to another location. You told her that you will raise her salary if she accepts it. However, it will take hours for Amanda from her home to get to the new location and she also calculates that the pay raise won’t cover the transportation cost. On the other hand, if you offer Amanda the incentives of free transportation or a house near the location, Amanda’s behaviour might change. She will be more likely to accept the offer.

In this case, incentives can change the way how people perceive something. With some consideration and thorough survey, incentives are beneficial for a company. Therefore, if you are willing to invest in research and survey, you can handle difficulties by offering incentives.

Lastly, to increase the effectiveness of incentives in diverse areas such as worker compensation or consumer engagement, you need to understand what your goal is. Understanding your goal will help you set a target and figure out what motivates your consumers or employees. Cash is just one way to incentivise. What you need to remember is, Gneezy advised, there is much you do not yet understand. Hence, you should constantly strive to monitor better and improve incentive structures.

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