Open main menu

Motivation crowding theory

In psychology and microeconomics, motivation crowding theory describes the observation that providing extrinsic incentives for certain kinds of behavior—such as promising monetary rewards for accomplishing some task—can sometimes undermine intrinsic motivation for doing that behavior. The result of lowered motivation, opposite the predictions of neoclassical economics, can be an overall decrease in the total amount of that behavior produced. For example, one study found that paying people to collect charitable donations actually caused them to collect fewer donations.[1]

The term "crowding out" was coined by Bruno Frey in 1997, but the idea was first introduced into economics much earlier by Richard Titmuss, who argued in 1970 that offering financial incentives for blood donation could counterintuitively lead to a drop in the total amount of blood donated. While the empirical evidence supporting crowding out for blood donation has been mixed, there has since been a long line of psychological and economic exploration supporting the basic phenomenon of crowding out.[2][3][4]

The typical study of crowding out involves assigning subjects a task to complete either for some explicitly mentioned payment sum or for no additional payment at all. Researchers then look to self-reported measures of motivation for completing the task, willingness to complete additional rounds of the task for no additional compensation, or both. Removing the extrinsic incentive often diminishes overall interest and willingness to engage in the task compared to pre-payment levels.


Theoretical developmentEdit

Previous thinkingEdit

According to research on operant conditioning and behaviorism in the 1950s, extrinsic rewards should increase the chances of the rewarded behavior occurring, with the greatest effect on behavior as the reward is given closer to the time of the behavior.[5] In these studies, removing the reward often quickly led to a return to the pre-reward baseline frequency of the behavior. These findings led to popular calls for the adoption of incentives as motivational tools in a variety of professional and educational contexts. Moreover, according to standard economics, providing extrinsic incentives for a behavior has an immediate relative-price effect which should produce more of that behavior by making that behavior more attractive. Literature in economics has myriad examples of this.[6] Thus, according to most thinking before the 1970s, offering extrinsic incentives would only promote more of the rewarded behavior.

However, some behaviors, Edward Deci noticed in the early 1970s, appear to provide their own reward. These behaviors are said to be intrinsically motivated, and their enjoyment or rewards come from the act of engaging in the task itself.[7] In this case, behavior does not require any extrinsic reward.[citation needed]

These observations led researchers to ask how providing extrinsic rewards for a given activity would influence intrinsic motivation toward that activity. While the relative-price effect would predict that rewards should only enhance the attractiveness of the behavior, there appeared to be indirect psychological effects of offering extrinsic incentives that, in some cases, have the opposite effect of making the behavior seem less attractive.[citation needed]

Experimental manipulationsEdit

Dependent measuresEdit

A wide range of behaviors has been investigated for crowding out, including completion of rote tasks, engagement with interesting puzzles, prosocial favors, creative art projects, and more. In almost all cases, crowding out is measured either as self-reported interest in the activity after an incentive has been provided or by measuring engagement in the activity, unbeknownst to experimental subjects, in a free-choice time period during which subjects believe the experiment has ended and after full compensation has been provided. Some investigations use both measures. In some cases (e.g. Gneezy and Rustichini 2000), crowding out has been found to directly affect effort and performance on the target behavior itself even while compensated for performance.[1]

Independent variablesEdit

According to a meta-analysis conducted by Deci, Koestner, and Ryan (1999), three kinds of rewards are used in the investigation of crowding out.[8] Task-noncontingent rewards, such as show-up fees, are offered to subjects independent of task performance or completion, simply as compensation for their time. These rewards are not expected to displace intrinsic motivation. Task-contingent rewards, on the other hand, are incentives on the quantity, quality, or completion of some specific behavior (e.g. solving word puzzles or collecting charitable donations). Crowding out is thought to be most significant in this case. Finally, performance-contingent rewards, incentives for achieving certain outcomes, are thought to create comparatively little crowding out because they can serve as a signal of status and achievement rather than tampering with motivation.[citation needed]

Early findings of crowding outEdit

Volunteer firefighters serve alongside paid professionals in many communities.

Early research in this area in the 1970s found that providing an extrinsic incentive for completing a task could undermine intrinsic motivation and subsequent effort devoted to that task across a broad range of contexts. This research considered the effect of monetary, tangible, and symbolic rewards among young children, college students, and adults doing a wide variety of tasks.[9][10][11][12][13] In a classic study, for instance, Deci paid all subjects for participation in a psychological experiment that involved solving multiple puzzles or IQ test questions.[14] Half of the subjects were paid a flat fee just for showing up to the experiment, but the other half of subjects were informed that they would be paid per their completion of the study's tasks. After the presumptive experiment was over, subjects were left with free time during which they could either sit idly or complete more tasks. Deci measured the number of additional IQ questions or puzzles completed during this non-compensated time as well as self-reported measurements of interest in the task. Deci found that, compared to those who were paid simply for showing up, subjects who were paid specifically to complete the tasks were significantly less likely to complete additional non-compensated tasks and gave lower ratings of interest levels in the tasks themselves. Deci interpreted these findings to suggest that motivation for and interest in the tasks had been displaced by the provision of extrinsic incentives.[citation needed]

These studies typically find that if incentives are large then, once removed, they can have long-run crowding out effects.[15] However, more recent research has found that even if workers find incentives to be insufficient then there can be short-run crowding out of the rewarded behavior too.[8][1] Examples of early crowding out studies include:

  • In a pioneering study, Deci (1971) had college students attempt to solve a puzzle game called a Soma cube. During Phase I of the experiment, all subjects had the opportunity to play with the cube and attempt to solve several puzzles. During Phase II, half of the subjects (control) repeated Phase I whereas the other half of subjects were paid $1 for each puzzle they could solve. During Phase III, no one was paid but experimenters interrupted participants in the middle of the session, giving them a cover story about why the experimenter needed to leave the room for a few minutes. Secretly, experimenters were able to observe how participants spent their free time. Deci found that those who had been paid during Phase II were significantly less likely to play with the cube during the free, uncompensated time during Phase III.
  • In a follow-up study that replicated the basic pattern of results from 1971, Deci (1972) found that offering verbal praise as a reward for task completion did not have a similar backfiring effect as offering a monetary reward had.
  • Kruglanski et al (1971) found that if high school students were promised an extrinsic incentive before engaging in a variety of tasks, the students showed less creativity and subsequently reported enjoying the task less compared to those who were not promised payment at the outset.
  • Lepper et al (1973) found that children who were told that they would receive a reward in exchange for drawing—something they had previously shown to be intrinsically interested in—came to be subsequently less interested in drawing after the reward was given compared to those who received a reward unexpectedly or who received no reward at all.

Other research has shown that a similar effect of crowding out can occur from negative disincentives for behavior, too. For instance, there has been work showing that increasing penalties can actually lower obedience with the law and decrease worker performance.[16][17] While all of these early investigations demonstrated that providing extrinsic incentives could undermine motivation for the rewarded behavior, researchers had not yet established the psychological process involved that could explain this consistent pattern of results.[citation needed]

Psychological theories explaining crowding outEdit

Various explanations have been offered for why crowding out occurs.


On this view—sometimes referred to as cognitive evaluation theory—the post-behavioral significance people assign to the reward determines subsequent motivation.[9][18] Deci and Ryan argue that rewards can be seen to have two components: one that controls people's behavior and thus infringes on their autonomy, and a different, status-signaling component that enhances people's sense of competence. If an extrinsic reward for some behavior appears to be controlling (i.e. the reason a person could plausibly be taken to have performed that behavior), this is argued to supplant intrinsic motivation for engaging in the behavior. Insofar, however, as the extrinsic incentive is seen not as an inducement but rather as a signal of high status or high achievement (i.e. a merit-based award), the incentive will engender more effort without crowding out motivation. On this account, then, the extent to which a given extrinsic incentive crowds out motivation is determined by the balance of the controlling-versus-status-signaling nature perceived by the actor.[citation needed]


The application of self-perception theory to motivation suggests that people sometimes form post-behavior judgments about the causes of their actions by considering the external circumstances of their decision. While intrinsic motivation for doing the activity might be a cause, the presence of an extrinsic reward could also be sufficient for explaining a behavior. The overjustification account of motivational crowding, most prominently advanced by Lepper et al. (1973), argues that people recognize the presence of a significant extrinsic incentive, attribute their motivation for doing the rewarded activity to the reward itself, and consequently lower their feelings of intrinsic motivation toward the activity.[13] Thus, they infer, if effort for engaging in a task becomes too onerous or if an extrinsic reward is removed, people feel less internally motivated to engage in the task compared to those who were never offered a reward for doing so.


Various attempts have been made by behaviorists to explain the apparent phenomenon of crowding out in terms of reward conditioning.[19] These theories mostly reject the concept of intrinsic motivation and instead argue that behaviors that are taken to be intrinsically motivated are instead motivated by the generalized social praise they tend to garner. Dickinson argues that part of why these behaviors are socially praised is precisely because they are not connected with any particular reinforcers. Thus, the introduction of a specific reinforcer such as an extrinsic reward lowers the public praise. If this resultant effect is larger than the size of the specific reinforcer, she argues, then free-choice selection of that behavior will decrease.[citation needed]

Economic utilityEdit

Some have argued that certain utility functions can be modeled to explain crowding out.[20] Bénabou and Tirole, for instance, have theoretically established that crowding out can reliably occur if an agent's utility function for some behavior is composed of three things: intrinsic motivation, extrinsic motivation, and image-signaling concerns. Rewards can serve as a signal in two ways (described below), they argue: signals to actors and signals to observers.

Signals to actorsEdit

In a context of uncertainty or information asymmetry, rewards can signal important information to the actor.[21] If the person offering the reward (the "principal") is presumed to know something more about the task than the person to engage in the activity (the "agent"), then offering an extrinsic reward can be seen as revealing the principal's distrust that the action would be taken without the inducement. On this view, offering a reward is a signal that either the principal knows the task is unpleasant and otherwise would not be completed, or that the principal does not trust that the agent to be sufficiently skilled or motivated without such incentives. On either interpretation, agents are said to infer something about the activity that lowers their willingness to engage in it when the incentive is removed. This idea is related to what has been referred to as the "Sawyer Effect".[22]

Signals to observers about actors' motivationsEdit

Additionally, the presence or absence of extrinsic incentives can be interpreted as signals to observers of an agent's motivations for engaging in some activity.[23] To the extent that agents are concerned with image-signaling, the presence of extrinsic incentives can lower interest in engaging in some task that might signal non-altruistic motives.[13] Compatible with this idea are studies showing that the effect of crowding out is greater in the case when extrinsic incentives are known publicly compared to when they are known only to the actor but not observers.[24]

Debate and meta-analysesEdit

Controversy was ignited when some researchers questioned whether the data support claims that motivation crowding actually occurs. Meta-analyses revealed mixed or even null overall effects of extrinsic rewards on intrinsic motivation.[25][26] Separately, though, these meta-analyses have been questioned, especially for their treatment of dependent measures and failure to account for moderating variables (e.g. kind of reward or dependent measure). Other meta-analyses have concluded that, once these factors are properly controlled for, motivation crowding for certain behaviors is a robust effect for certain kinds of rewards (typical effect sizes are in the range of d=0.3 to d=0.5).[8][27][28][29]

Through the debate, consensus seems to have emerged that crowding out reliably occurs if the following conditions are met:[30]

  • Rewards are offered in the context of pre-existing intrinsic motivation (e.g. in a prosocial setting or for interesting tasks).[31]
  • Rewards are known in advance and expected.
  • Rewards are tangible.
  • Rewards are conditional on task engagement.
  • Rewards can be interpreted by the agent and/or observers as controlling.


People have proposed using the insights of motivational crowding theory to change reward structures at work, in schools, for government policies, non-profits, and at home. The basic phenomenon of incentives undermining motivation, effort, and output has been demonstrated in populations of children, college students, adults, and workers, both in the lab and in the field. Crowding out has been shown to occur in teacher performance-based pay, temporary workers' effort in commission-based pay structures, charitable giving, and student scholastic performance.[8][32][33] The collection of this evidence has led some to call for rethinking how governments and charitable organizations that rely on volunteers use incentives and pay-for-performance schemes.[34]

See alsoEdit


  1. ^ a b c Gneezy, Uri; Rustichini, Aldo (2000). "Pay Enough or Don't Pay at All*". Quarterly Journal of Economics. 115 (3): 791–810. CiteSeerX doi:10.1162/003355300554917. ISSN 0033-5533.
  2. ^ Frey, Bruuno (1997). Not Just for the Money. Cheltenham: Edward Elgar Publishing. ISBN 1 85898 509 9.
  3. ^ Richard, Titmuss (2018-10-31). The gift relationship (reissue): From human blood to social policy. Policy Press. ISBN 9781447349570.
  4. ^ Mellström, Carl; Johannesson, Magnus (2008). "Crowding Out in Blood Donation: Was Titmuss Right?". Journal of the European Economic Association. 6 (4): 845–863. CiteSeerX doi:10.1162/jeea.2008.6.4.845. ISSN 1542-4766.
  5. ^ Skinner, B. F. (2012). Science And Human Behavior. Simon and Schuster. ISBN 9781476716152.
  6. ^ Lazear, Edward P (2000). "Performance Pay and Productivity". American Economic Review. 90 (5): 1346–1361. CiteSeerX doi:10.1257/aer.90.5.1346. ISSN 0002-8282.
  7. ^ Ryan, Richard M.; Deci, Edward L. (2000). "Intrinsic and Extrinsic Motivations: Classic Definitions and New Directions". Contemporary Educational Psychology. 25 (1): 54–67. CiteSeerX doi:10.1006/ceps.1999.1020. ISSN 0361-476X. PMID 10620381.
  8. ^ a b c d Deci, Edward L.; Koestner, Richard; Ryan, Richard M. (1999). "A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation". Psychological Bulletin. 125 (6): 627–668. CiteSeerX doi:10.1037//0033-2909.125.6.627. ISSN 0033-2909.
  9. ^ a b Deci, Edward L. (1971). "Effects of externally mediated rewards on intrinsic motivation". Journal of Personality and Social Psychology. 18 (1): 105–115. doi:10.1037/h0030644. ISSN 0022-3514.
  10. ^ Deci, Edward L. (1972). "The effects of contingent and noncontingent rewards and controls on intrinsic motivation". Organizational Behavior and Human Performance. 8 (2): 217–229. doi:10.1016/0030-5073(72)90047-5. ISSN 0030-5073.
  11. ^ Deci, Edward L. (1972). "Intrinsic motivation, extrinsic reinforcement, and inequity". Journal of Personality and Social Psychology. 22 (1): 113–120. doi:10.1037/h0032355. ISSN 0022-3514.
  12. ^ Kruglanski, Arie W.; Friedman, Irith; Zeevi, Gabriella (1971). "The effects of extrinsic incentive on some qualitative aspects of task performance1". Journal of Personality. 39 (4): 606–617. doi:10.1111/j.1467-6494.1971.tb00066.x. ISSN 0022-3506.
  13. ^ a b c Lepper, Mark R.; Greene, David; Nisbett, Richard E. (1973). "Undermining children's intrinsic interest with extrinsic reward: A test of the "overjustification" hypothesis". Journal of Personality and Social Psychology. 28 (1): 129–137. doi:10.1037/h0035519. ISSN 0022-3514.
  14. ^ Deci, Edward L. (1975). Intrinsic Motivation. Plenum Publishing Company Limited. ISBN 9780306344015.
  15. ^ S., Frey, Bruno; Reto, Jegen (2000). "Motivation crowding theory: a survey of empirical evidence". Working Paper / Institute for Empirical Research in Economics. 49. doi:10.3929/ethz-a-004373506.
  16. ^ Akerlof, George A.; Dickens, William T. (1982). "The Economic Consequences of Cognitive Dissonance". The American Economic Review. 72 (3): 307–319. JSTOR 1831534.
  17. ^ Ernst, Fehr; Simon, Gächter (2001). "Do Incentive Contracts Crowd Out Voluntary Cooperation?".
  18. ^ Deci, Edward L.; Ryan, Richard M. (1980), "The Empirical Exploration of Intrinsic Motivational Processes", Advances in Experimental Social Psychology, Elsevier, pp. 39–80, doi:10.1016/s0065-2601(08)60130-6, ISBN 9780120152131
  19. ^ Dickinson, Alyce M. (1989). "The Detrimental Effects of Extrinsic Reinforcement on "Intrinsic Motivation"". The Behavior Analyst. 12 (1): 1–15. doi:10.1007/bf03392473. ISSN 0738-6729. PMID 22478013.
  20. ^ Bénabou, Roland; Tirole, Jean (2006). "Incentives and Prosocial Behavior". American Economic Review. 96 (5): 1652–1678. doi:10.1257/aer.96.5.1652. ISSN 0002-8282.
  21. ^ Benabou, Roland; Tirole, Jean (2003). "Intrinsic and Extrinsic Motivation". Review of Economic Studies. 70 (3): 489–520. CiteSeerX doi:10.1111/1467-937x.00253. ISSN 0034-6527.
  22. ^ Pink, Daniel H. (2011). Drive: The Surprising Truth About What Motivates Us. Penguin. p. 35. ISBN 9781101524381.
  23. ^ Lepper, Mark R. (1973). "Dissonance, self-perception, and honesty in children". Journal of Personality and Social Psychology. 25 (1): 65–74. doi:10.1037/h0034269. ISSN 1939-1315. PMID 4688170.
  24. ^ Ariely, Dan; Bracha, Anat; Meier, Stephan (2009). "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially". American Economic Review. 99 (1): 544–555. CiteSeerX doi:10.1257/aer.99.1.544. ISSN 0002-8282.
  25. ^ Cameron, Judy; Pierce, W. David (1994). "Reinforcement, Reward, and Intrinsic Motivation: A Meta-Analysis". Review of Educational Research. 64 (3): 363. doi:10.2307/1170677. ISSN 0034-6543. JSTOR 1170677.
  26. ^ Eisenberger, Robert; Cameron, Judy (1996). "Detrimental effects of reward: Reality or myth?". American Psychologist. 51 (11): 1153–1166. doi:10.1037//0003-066x.51.11.1153. ISSN 0003-066X.
  27. ^ Rummel, Amy; Feinberg, Richard (1988). "COGNITIVE EVALUATION THEORY: A META-ANALYTIC REVIEW OF THE LITERATURE". Social Behavior and Personality. 16 (2): 147–164. doi:10.2224/sbp.1988.16.2.147. ISSN 0301-2212.
  28. ^ Wiersma, Uco J. (1992). "The effects of extrinsic rewards in intrinsic motivation: A meta-analysis". Journal of Occupational and Organizational Psychology. 65 (2): 101–114. doi:10.1111/j.2044-8325.1992.tb00488.x. ISSN 0963-1798.
  29. ^ Tang, Shu-Hua; Hall, Vernon C. (1995). "The overjustification effect: A meta-analysis". Applied Cognitive Psychology. 9 (5): 365–404. doi:10.1002/acp.2350090502. ISSN 0888-4080.
  30. ^ Gneezy, Uri; Meier, Stephan; Rey-Biel, Pedro (2011). "When and Why Incentives (Don't) Work to Modify Behavior". Journal of Economic Perspectives. 25 (4): 191–210. doi:10.1257/jep.25.4.191. ISSN 0895-3309.
  31. ^ Hossain, Tanjim; Li, King King (2014). "Crowding Out in the Labor Market: A Prosocial Setting Is Necessary". Management Science. 60 (5): 1148–1160. doi:10.1287/mnsc.2013.1807. ISSN 0025-1909.
  32. ^ Meier, Stephan (2006). "Do Subsidies Increase Charitable Giving in the Long Run? Matching Donations in a Field Experiment". doi:10.2139/ssrn.960959. ISSN 1556-5068.
  33. ^ Fryer, Roland (2010). "Financial Incentives and Student Achievement: Evidence from Randomized Trials". Cambridge, MA. doi:10.3386/w15898.
  34. ^ Frey, Bruno (2017). "Policy consequences of pay-for-performance and crowding-out" (PDF). Journal of Behavioral Economics for Policy. 1: 55–59.