Why Monetary Incentives are like Cocaine

I’m sure most business students would be familiar with Herzberg’s Motivation-Hygiene Theory and money’s place within it. In short, a person’s salary, no matter how high, would not be able to make her satisfied at work, it merely prevents her from being dissatisfied (hence, it is a hygiene factor). However, the Brafman brothers refer to several experiments that suggest that, at least in some circumstances, a monetary reward actually serves as a disincentive.

Continue reading

Advertisements

Of Swiss Nuclear Waste & Money

Ori and Rom Brafman recount an interesting episode that sheds light on the psychological effects that monetary incentives have on us. In Sway: The Irresistible Pull of Irrational Behaviour, they visit Switzerland in 1993, where the Swiss government was planning to designate either one of two small towns as nuclear waste repositories. Two researchers were interested as to how the townspeople would react and went out to get some answers.

Continue reading

Health Warnings Cause Smoking

Did you know that those gruesome images on cigarette boxes actually stimulate smokers’ cravings?

There’s a new brand of marketing research starting to gain momentum called ‘Neuromarketing’, which I find very illuminating. This entails researchers placing respondents inside fMRI or EEG machines (if you’re a big fan of House, you’d probably seen them before) to gauge their actual responses to certain stimuli. If I’m not wrong, machines like the fMRI identify the flow of oxygen to certain parts of the brain to gauge a person’s neurological response. For example, if you’re feeling guilty, there will be an increased flow of oxygen to your prefrontal cortex, the part of your brain that controls that particular emotion. I’ve never liked using questionnaires, you hardly ever get a genuine response – well, at least I hardly ever give a genuine response (oops!). Neuromarketing circumvents this problem because well, want to bluff also cannot bluff.

Apparently, these researchers found that health warnings stimulated smokers’ nucleus accumbens, generally known as the ‘craving spot’. So, images of cancer-ridden lungs actually promote smoking! Who would have thought? Martin Lindstrom’s book, Buyology: Truth and Lies About Why We Buy, is an excellent account of neuromarketing’s rapid progress. I find it fascinating, don’t you?