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Friday, August 18, 2006

Deficit Reduction

August 18th. 2006
Sent to but not published in the New York Times

I fear that the Congressional Budget Office may be too firmly attached to the rear-view mirror (Brighter '06 Deficit outlook, but Long Term Looks Grim, New York Times, August, 18, 2006. Page A12).

Much of the projected surplus rests on the Capital Gains Tax. If other investors are like me, we are in trouble beginning with the third quarter receipts (due September 15th. at the IRS). During the first two quarters, I had healthy capital gains in my managed portfolio and sent a healthy contribution to Washington to pay my estimated tax liability. In the third quarter I had substantial losses, so will be sending little or nothing to the IRS.

My guess is that over the year, my capital losses will balance my capital gains, so the IRS may owe me a substantial refund and the '06 deficit will not be as healthy as currently anticipated.

Sunday, August 13, 2006

Avoid Retroactive Legislation

August 13th. 2006
Published in the Boston Globe

The Bush Administration still does not understand that Americans want a return to the rule of law.

Legislation, of any kind, that is retroactive is particularly odious (White House proposes retroactive war crimes protection. Boston Globe, August 10, 2006, page A8). How can one arrange one's behavior unless one has a clear understanding of the law. Of course, it is worse when new crimes are created retrospectively; but even creating retrospective protection is unwise -- its is just like re-dating stock option grants to ensure a larger payoff.

Especially at this time of heightened terrorist activity, we must maintain our commitment to the rule of law. Without that, we have lost our fundamental values.

Boston Globe version is here

Wednesday, August 9, 2006

Joe Lieberman

August 9th. 2006
Sent to but not published in the New York Times

If, in 2000, Joe Lieberman had loved his party more than he loved himself and the trappings of power, he would not have insisted on running for the Senate as well as the Vice-Presidency. This self-serving behavior risked the appointment of a Republican to replace him.

If Joe Lieberman loved his party more than he loves himself and the trappings of power, he would not insist as running as an independent in the November general election.

This selfish behavior has surely relieved any of his Democratic friends in the Senate or the House from the obligation of providing him with support in November.

His actions contribute to the disaffection we feel for politicians of all stripes. It is a pity when he could have demonstrated his commitment to the party by acquiescing in its decision and fighting hard for Lamont's victory. That is what Democrats expect.

British Petroleum

August 9th. 2006
Sent to but not published in the New York Times (Business Section)

Other lessons from Prudhoe Bay.

Over the past two years, the six executive Directors of BP received over $16 million dollars in Bonuses. These bonuses were paid on the basis of performance standards set by the Board's Remuneration committee. One way that high profit figures can be reached is by skimping on invisible but essential expensive tasks like maintenance (training and R&D are often early casualties too).

The failures of the pipelines in Alaska are clear evidence that BP undertook insufficient inspection and maintenance. At the very least, the Directors should hand back their bonuses and the Remuneration Committee should review the contingent, performance based pay of all officers of the Corporation and make appropriate adjustments.

Tuesday, August 8, 2006

Arizona Ballot OB Comments

Responses to the Query about the Arizona Ballot and Intrinsic and Extrinsic Motivation.08.08.2006

Here was my query:
Since my retirement I have become interested in the American political process -- I am a volunteer with Common Cause. I also try to apply my, rapidly obsolescing OB knowledge to things that go on politically.
Shortly, the Arizona ballot will include a proposal to set up a state lottery type of system whereby every vote cast in the Primaries and General elections will be entered into a lottery with one prize of $1 million.
The proponents of this argue that this will increase the number of people that vote and will also encourage those new voters to try to understand the issues at stake in the election.
This seems to me to be a case of adding an extrinsic reward (the lottery prize, albeit with a small expected value) to a situation, voting, where there is a already a modicum of intrinsic motivation.
So, what do you think based on motivation theory: are the proponents correct and people will develop a deeper understanding
will intrinsic motivation be undermined?
what conditions can Arizona create to ensure that the intrinsic motivation of voters is NOT undermined, or better is enhanced?

I will post, anonymously (or give credit if you prefer), responses on my LTE/Op-ED website URL:
Thank you for your interest!

The responses are presented in order of appearance at my desk.
Here is the Index
  • Bad Idea .........................................................................................35, 17
  • Conditions for Effective Use of Extrinsic Reward .......................................2
  • Disincentives to Vote ................................................................................1
  • Effect on existing Voters
    • Increase Intrinsic Motivation
    • No change in Intrinsic Motivation ..................................................10
    • Reduce Intrinsic Motivation ............................................................6
  • Effect on new Voters
    • Increase Intrinsic Motivation ...........................................................9
    • No change in Intrinsic Motivation...................................................18
    • Reduce Intrinsic Motivation .........................................3, 6, 7, 10, 13
  • Expectancy Theory Perspectives .......................................................14, 16
  • Incentive is too Weak to Have an Effect ....................................................1
  • Individual Differences .........................................................................13 15
  • Questions about Intrinsic and Extrinsic Motivation Theory ................2, 13 19
  • Self Perception Theory ..............................................................................9
  • References ......................................................................2, 8, 18, 20 21 22
  • Unintended Consequences ........................................................................4
  • Use as a Class Project .............................................................................12
  • Voters all have Extrinsic Motives ..............................................................14

1. I have no insight to add in terms of motivation theory. However, as an Arizona resident who has closely followed this debate, I wanted to point out the jury pool issue. Arizona relies entirely on registered voters for its jury pools and numerous polls and anecdotal evidence suggests that many Arizonans refuse to register in order to avoid jury duty.
Such residents could not be considered "civic-minded." As well, one has to wonder if a small chance at a prize (perhaps of equivalent value to a few dollars of lottery tickets) would even be an effective extrinsic motivator for residents who have already demonstrated they are swayed by the existing incentive to not vote.
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2. Interesting. I read something the other day about the "blurriness" of the intrinsic/ extrinsic motivation distinction, but of course I can't put my finger on it.
Reiss (2005) opines that: "The undermining effect of extrinsic reward on intrinsic motivation remains unproven." That paper is here:

Maybe the Arizona voters could only claim the lottery prize contingent on a test of issues knowledge?
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3. This is a farce. People will go vote just to get a chance on the lottery without one thought about politics. What are they thinking?
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4. Unintended consequences: This could encourage people to figure out ways to vote more than once!
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5. This idea is gross, stupid, absurd, brainless, foolish, puerile, irresponsible, incompetent, moronic, asinine, ridiculous, silly, and insane.
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6. To me it will be a sad day if people will have to be "bribed" to vote. Stimulating voting in this manner raises several ethical questions to me. Will such a vote mean anything? Will the person even know or care who he or she is voting for? Can such a vote count the same as someone who was intrinsically motivated to vote, voting to make a difference? I believe even a low voting turnout is much better than a "synthetic" high turnout. In terms of motivation theory, I expect that such a step can be a demotivator to vote to those people that would have been intrinsically motivated to vote. In other words, it can lead to people that takes voting sincerely not to vote anymore.
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7. To modify slightly anon's perspective [#3], I think that not all "people" as he refers to them, will vote only to get a free chance at the lottery, but I believe that many if not most new voters at the margin will vote precisely for that reason. I also feel that they will fail to recognize or acknowledge any responsibility to understand issues and candidates sufficiently to develop and vote well formed convictions. I agree completely with anon's [3] ending question.
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8. The following might be relevant to your issue:
Kerr, Steven. On the folly of rewarding A, while hoping for B. [Book; Edited Book] Vecchio, Robert P (Ed). (1997). Leadership: Understanding the dynamics of power and influence in organizations. (pp. 246-256). xiii, 577 pp. Notre Dame, IN, US: University of Notre Dame Press. Editor's Note. The original source is: Kerr, Steven. On the Folly of Rewarding A, While Hoping for B. Academy of Management Journal, Dec 1975, Vol. 18 Issue 4, p769-783.
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9. On the other hand, from a self-perception theory standpoint, perhaps the very action of going to the polls, even if for the wrong reasons, might spur people to think about the issues more than they would have otherwise. After all, the extrinsic motivator doesn´t tell them who to vote for, and if the issue were framed such that the money were interpreted as a "valuing" rather than "controlling" stimulus, it might increase intrinsic interest in the election.
I too think it is sad to bribe people into the public sphere. Personally, I would rather promote democracy through public discussion projects rather than voting, as lack of informed public discourse seems to me the root of the problem. But, then again, I think Martin´s question is a good one, not to be dismissed so lightly,
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10. A skeptic with regard to incentive in organizations I remain a skeptic about this proposal. Think about who this will attract. Those who want a million will come to vote in an uninformed manner. They will come to pull a lever just like a slot machine and will not take the time to think about what it is they are voting about. They are likely to be overly influenced by commercials for candidates. I don't think that is the type of voter this country needs. I am less concerned about incentives driving out intrinsic motivation of those who are already voting. They will continue to vote for the same reason. I also don't think, as I suggest above, that incentive driven behavior will become intrinsically driven behavior. To my knowledge there is not evidence for that. It is much more likely that voting behavior will be become functionally autonomous in the Allport sense.
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11. Now, what you [#5] are saying is that you disagree with this?
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12. Thanks so very much for your e-mail and info. It is rare that I come across a current issue that is so clear and that I can use as a very direct application of intrinsic/extrinsic motivation. It will make for a very good homework exercise for the OB students. How they frame their arguments for a very current application issue makes for a great assignment and the AZ voting one is a nice one for discussion on motivation and if the lottery isn't the answer, then a more interesting discussion can revolve around alternatives.
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13. From a research perspective I believe that the undermining of intrinsic motivation by extrinsic rewards has not been demonstrated to my satisfaction. I don't believe that in this case there would be any effect on those who are already voting of adding the proposed lottery, with the possible exception of those who morally object to the concept of gambling (you may find that there are actually many folks in Arizona that have that opinion).
I would more question the underlying logic of the whole idea. It seems to me that the voting rate is a reflection of the amount of engagement by a population in political thought and involvement. What you want in a population is highly engaged citizens who are knowledgeable about issues and care about the process. The voting rate is one measure of that engagement.
Increasing the voting rate by way of a lottery may increase voting, but it will not likely result in better informed and engaged citizens. In my mind getting people who are not voting to vote by this method (assuming that it would work) would be detrimental to the political process.
Voting is the way that people let their opinions be known to their representatives. Those who don't vote are also letting their opinion be know. That opinion is "I don't care enough about the issue to get off the couch and vote". By involving these people in the voting process without engaging them in the process of understanding and caring about the issues would not promote democracy in my opinion. This suggestion is like putting a band aid on a gunshot wound.
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14. I do not believe that this debate is so black and white. Does anyone truly vote based on some democratic-altruism? I think not. Although we would say we vote based on our convictions we also vote to support candidates that will give us what we want. While that is a theoretical model with more mediators than vote -> win, it is a similar model with voting on issues. Vote->get candidate I like->get policy that I like or supports my lifestyle, beliefs, or my profession. So, from an expectancy theory standpoint they are simply lowering the expectancy but raising the valence of the voting outcome. So, maybe there will be a new type of self-serving voter, but they will not be alone in their self-serving motives. We all have that motive to some degree. Just some thoughts. Which, wrong or right, might be more productive that 50 ways to say its stupid.
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15. Fascinating instigator of discussion!
I would be particularly curious, if you pursue research in this area, of how immigrants/naturalized citizens feel/act vs. those born here.
Certainly a thought-provoking proposition!
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16. The problem for many, I think, is instrumentality - they don't vote because they don't think it matters (e.g. "my one vote won't make a difference") - it does not lead to any positively valent outcome in their minds, and it takes time & hassles (negative valence). Others don't know the candidates well enough or they don't believe there's a big difference between them. These folks have no motivation & some would argue probably should not vote. So, offering extrinsic rewards might affect those who play the lottery thinking their odds are better than they are, but for most, I suspect it will have little impact, and for others, it may get people voting who should probably stay home (my cynical view)....
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17. In my view the Arizona voting prize is a very bad idea. The privilege of voting is all that is needed. Anything else undermines it.
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18. The below article will be relevant and very interesting to the question at hand: Gneezy, U., Rustichini, A., 2000. Pay enough or don’t pay at all. Quarterly Journal of Economics 115, 791–811. (you can download the article here: Here is the abstract: Economists usually assume that monetary incentives improve performance,and psychologists claim that the opposite may happen. We present and discuss a set of experiments designed to test these contrasting claims. We found that the effect of monetary compensation on performance was notmonotonic. In the treatments in which money was offered, a larger amount yielded a higher performance. However, offering money did not always produce an improvement: subjects who were offered monetary incentives performed more poorly than those who were offered no compensation. Several possible interpretations of the results are discussed.
Using the above, I would predict that there would not be any practically-important difference expected from the lottery idea unless the probability of receiving a payoff, and the payoff that will be received are both high. The only sure and quick way to make people vote is to make it the law to vote (as is the case in some European countries).
The problem in the U.S., from my external perspective (and having lived several years), is that there is a lot of voter apathy, which in many ways serves the institutions of power in good stead. Unless the root causes of apathy are identified and addressed voter turnout will always remain paltry.
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19. Very interesting thread! Some follow-up questions for the group.
1. How has "extrinsic motivation" and "intrinsic motivation" typically been operationalized in such studies that simultaneously examine intrinsic and extrinisic motivation? Is "pay" or "economic beneift" the primary extrinsic motivator in such studies? Are there other ways that extrinsic motivation has been operationalized?
2. Is anyone aware of any reviews or meta-analysis on the relationship of extrinsic and intrinsic motivators and performance?
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20. This debate has its origins in cognitive evaluation theory, for which numerous conflicting studies on the undermining effects of an extrinsic reward on intrinsic motivation have been conducted, largely in education, health and sports settings. For a nice review of this theory and its limitations for studying behavior in organizations, its subsequent expansion into self-determination theory (SDT) and the implications of SDT for many theories of organizational behavior see Gagne & Deci (2005) Self-determination theory and work motivation, Journal of Organizational Behavior, 26, 331-362.
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21. Bateman & Crant have a working paper that has a good review of the research and the controversy about whether extrsinsic rewards really do undermine intrinsic motivation. You can read their paper here
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22. Basically, the work of Deci and colleagues is probably the most relevant to your both questions below (they argue and show that extrinsic reward undermine intrinsically-motivated behavior). The following should be interesting: Deci, E.L., Ryan, R.M., & Koestner, R. (1999). A meta-analytic review of experiments examining the effect of extrinsic rewards on intrinsic motivation. Psychological Bulletin 125, 627-668.
However, extrinsic rewards are quite strongly related to performance:
Jenkins, G. Douglas; Mitra, Atul; Gupta, Nina; Shaw, Jason D. (1998). Are Financial Incentives Related to Performance? A Meta-Analytic Review of Empirical Research. Journal of Applied Psychology, 83, 777-787.
Stajkovic, A. D., & Luthans, F. (2003). Behavioral management and task performance in organizations: Conceptual background, meta-analysis, and test of alternative models. Personnel Psychology, 56, 155-195.
Peterson, S. J., Luthans, F. (2006). The impact of financial and nonfinancial incentives on business-unit outcomes over time. Journal of Applied Psychology, 91, 156-165,
Hackman and Oldham have done a lot of work in the area too, with the Job Characterics Model. Their instrument, the JDS, is supposed to measure intrinsic motivation. However, meta-analytic results show correlations (with performance) that are not as strong as most would think/expect (see Fried & Ferris, 1987). Their results indicated no relationship between job characteristics and performance. Specifically, the meta-analytic correlations (90% credibility values) between the five job characteristics and rated (objective) performance that Fried and Ferris reported ranged from .00 (task significance and autonomy) to .13 (task identity). The analogous correlations between the three critical psychological states and performance were .03 (knowledge of results) and .00 (experienced meaningfulness and responsibility). For a review and critique see:
De Treville, S., & Antonakis, J. (2006). Could lean production job design be intrinsically motivating? Contextual, configural, and levels-of-analysis issues. Journal of Operations Management, 24(2), 99-123.
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Monday, August 7, 2006

August 7th. 2006
Sent to but not published in the Boston Globe

Arizona's Voting Lottery

Martin G. Evans
Professor Emeritus, University of Toronto

        The Arizona voting lottery is an interesting idea (Jeff Jacoby. A million bad reasons to vote, Boston Globe, August 2nd. 2006). Some have lauded it as a vehicle for increasing people's interest in the democratic process and election issues, others have decried it as foolish because it will bring people to the polls who have no knowledge of or interest in the issues being decided.
        When it comes to explaining voting patterns, there are two factors to be considered: opportunity to vote and motivation to vote. If implemented, this million dollar voting proposal has some interesting and counter intuitive effects. Jacoby is scornful of "good government" organizations like the League of Women Voters and Common Cause who have proposed a variety of measures to make voting easier; the so-called turnout worshipers. He argues that removing barriers to voting by allowing provisional ballots, universal absentee ballots, and Oregon's mail-in ballot open the door to the uninformed voter. He is wrong. He is confusing motivation with opportunity. All of these measures reduce the barriers to voting thereby increasing the opportunity to vote. For many, especially the poor, getting to the poll is not the easy event, implied by Jacoby, that it is to those of us with flexible working hours and easily accessible workplaces. Consider the difficulties that these people would have reaching the polling place:
        • the person with a long and difficult commute between home (close to the polling station) and work
        • the low paid worker working two jobs in order to pay for rent, food, and medical care for the family
        • the single mother juggling work and two children, each with different school schedules
For each of these, getting to the polling place in a timely fashion may be nearly impossible. For Jacoby, it is trivial.
        In addition, insufficient equipment, overworked and under-trained poll workers, long lines, and deliberate voter suppression by political party organizations ( providing inaccurate information like "If you can't vote on Tuesday, come on Thursday") all raise barriers to voter participation. Their presence makes it difficult for even the most motivated voter to actually consummate his or her vote. By adding a monetary goal, the million dollar lottery may cause people to try a little harder to overcome the barriers to voting.
        The impact on the motivation to vote itself  is more complex. Motives to do something come in two flavors: intrinsic and extrinsic motivation. Do I work because the work is challenging and enjoyable (intrinsic motivation) or do I work because I am paid (extrinsic motivation)? In the context of voting, the intrinsic motives arise out of the issues in the election, the attractiveness of the candidates, and the desire to perform the duties of citizenship – I can't wait to become an American citizen so that I can vote. Into this mix, the Arizona lottery initiative introduces an extrinsic reward: the opportunity to win a million dollars.
        The proponents of the Arizona Lottery Proposal believe that if they encourage people to vote through the lottery, the people will also increase their interest in the people and the candidates and therefore become better informed. While this is plausible on the surface, I do not think this will happen. The research on motivation has shown that adding extrinsic rewards to an activity that is intrinsically motivating will undermine or reduce the intrinsic motivation. In the voting context, while the addition of an extrinsic reward increases the total motivation of the individual to vote, it paradoxically reduces the intrinsic motivation, that is it undermines the individual's interest in the issues, the candidates, and desire to be a good citizen. In some sense, the control of the individual's voting behavior has been removed from him or herself to the extrinsic reward. This is not good. The proponents of the scheme argue that attracting people to vote will result in their developing an interest in the issues. Unfortunately this will not occur. Interest is likely to decrease.
        So we have a dilemma. Adding the extrinsic reward may make people more likely to vote. However, it will probably not increase their interest in politics. Jacoby is right that it is a bad idea; the advocates of good government are also right that it is a bad idea. To increase people's interest in the issues, we have to make more fundamental changes to the election procedures: appoint independent non-partisan election officers, make elections more competitive, use independent redistricting commissions, and, most important, take private money out of the election process. The benefit of increasing persistence to vote can also be acquired in other ways – especially the suppression of voter suppression tactics.