Adam Grant and Barry Schwartz on Incentives, Motivation, and Chance

“It turns out, it not only matters what people do, it matters why they do it.”

Psychologist Barry Schwartz is best known for his immensely popular TED Talk, and his book the Paradox of Choice. His latest book, Why We Work, dives into questions of meaningful work and motivation. In this Heleo Conversation, Schwartz joins Wharton professor Adam Grant in a discussion about education and how to change motivation and incentives in schools and in the workplace.

Barry Schwartz: You just had a really interesting op-ed in the New York Times about how curving grades in college creates the worst possible environment because it sets students against one another. You’ve been working to change that zero-sum game culture at Wharton, at least in the classes that you teach.

I thought your solutions were ingenious. I completely agree with you that not only are we creating the wrong way to live as human beings, we’re even creating the wrong way to live as workers in the modern world where almost everything you do is collaborative—and you really don’t feel like collaborating with people who you regard as your enemies.

Adam Grant: Well, I’m honored that you read it, and actually one of the experiments that I ran in the classroom was inspired by something that you once did in your Swarthmore classroom with incentives. You want to tell us the story?

Barry: This is a long time ago, and I was teaching a class in motivation. I thought, why not turn the class into an experiment. I held up the grade sheet on the first day of class—those days everything was done on paper—and everybody in the class had a B. I said, this is your grade. There will be mid-term, there will be a final, there will be a term paper. I’ll grade all three of them in standard fashion, but no matter how well or badly you do, your grade in the class is B. Let me make clear what the implication of this is. There is no reason for you to do anything in this class except because you’re interested in it. One kid got up and said, “Are you serious?” “Yeah.” He walked up, shook my hand, said, “Thank you very much,” and was gone, never saw him again.

What happened was it was spectacular for the first five weeks. Everybody came, everybody did their reading, discussion was high level, and then mid-term week came, and the students said to themselves, “I’ll put this on hold, and I’ll devote all my time to the mid-terms that ‘count’, and then when mid-term week is over, I’ll catch up.” As people who are familiar with college knows, you never catch up. There’s always more stuff to do, so they didn’t catch up. They started to be embarrassed. They were embarrassed enough that they stopped coming, and fewer and fewer people came, and people fell further and further behind. At the end of the semester, four papers were turned in.

It was a complete failure, and I realized only years later what an unfair thing it was for me to do to these poor students who had gone all through school counting on the grade incentive to guide them about how hard to work. And I just took the prop away and put nothing in its place. In retrospect, I apologize to all of them because they probably walked away with a bad feeling about themselves that was unwarranted.

Adam: You’ve spent a lot of your time since then thinking about what to replace those incentives with. When you think about building a workplace or a school that has “the right incentives,” what does that look like for you?

“It turns out, it not only matters what people do, it matters why they do it.”

Barry: It’s easy to engineer the typical incentive system—high grades, bonuses, company shares—and while it might start out doing a pretty good job, inevitably people find a way to meet the metrics that get them the incentives without actually doing the work that the metrics were designed to measure. And at that point the whole system collapses. It turns out, it not only matters what people do, it matters why they do it. You want people to be doing the right thing for the right reasons. The right reason might be to gain understanding. It might be to push some field forward. The right reason might be to produce something that will improve the lives of other people. You want those kinds of motives to operate because that’s going to actually inspire people not just to work hard but to work smart.

In the book Why We Work, what I essentially suggested is that people want to do good things in the world. The trick is to make it possible in the workplace for people to do work that does make the world better. I think your work is also shot through with these kinds of ideas. There’s a famous paper about the folly of hoping for B and measuring A.

Adam: Steven Kerr, yeah.

Barry: That’s what incentive systems are, you’re always measuring. You measure what you can, and then convince yourself you’re measuring what matters. Rarely is that the case. Maybe in the first year or two, but after a while the connection between the metric and the thing you care about is almost arbitrary.

Adam: What’s interesting about that is when I work with leaders on trying to tackle these kinds of problems and focus more on intrinsic motivation, on building more meaningful jobs, they don’t know what the right doses are. With financial incentives, it’s easy to calibrate and say, “Look, I know what the right size bonus is for people to care, where it has a meaningful impact on their life, but it’s not oversized.” I don’t know a dean of a university, a CEO of a company, or an entrepreneur who says, “Here’s the right amount of meaningful work, or here’s the right number of choices in order to give people the autonomy that they want.” How do you think about being able to gauge when you’ve given enough?

Barry: I think it’s a great point. It’s hard. You will almost certainly get it wrong at first. The way you learn, I believe, is by being mindful of the effect of your first guess. There’s a New Yorker article that I have students read all the time by Jerome Groopman, an oncologist, about how he learned how to tell patients that they were going to die. He describes this case of a 28-year-old woman who’s got metastatic breast cancer and will almost certainly be dead in two years. He describes the conversation. You just… your mouth drops in awe of the delicacy and sensitivity with which he reads what people are asking and what they’re not asking, to find the right way to give some hope without being unrealistic.

Then he says, “Okay, I did that pretty well. How did I learn?” His answer was, “I learned by making catastrophic mistakes because there was no one to guide me. I believe you’re supposed to be honest with your patients, so bam, I told patients right off. I crushed people who might have lived five additional, reasonably happy and satisfied years. I just crushed them like bugs. Then I erred on the other extreme, hiding it from people, and that was terrible also. Slowly, over time, I got it a little less wrong, a little less often, and I still don’t get it right all the time, but I get it closer to right because I’ve learned from my mistakes.”

I think the same thing is true with what to offer people at work in order to get real satisfaction and produce great work. You need to have flexibility, and you also need to know the workforce well enough to know what each person needs. It’s much harder than just calling some high-priced executive to pay a consultant to tell you what size and structure the bonuses should be. I’m not saying it’s easy, but you’ll have more satisfied and much better workers, and you won’t have to worry about hiring and training new people to replace the workers who leave very well compensated and very dissatisfied.

Adam: You’ve actually suggested that we should not just change our incentives, but change the very selection systems that create incentives in the first place. A doctoral student, Danielle Tussing, and I got data from an investment bank, and we looked at the extent to which you were a star performer, and then your likelihood of leaving the company. If you graduated from an Ivy League school and you were a star, the more likely you were to look for another job. Whereas, if you came from a state school, the more your performance rose, the more likely you were to stay and feel grateful that you had found an organization that was a fantastic fit for you.

You could raise questions about the entitlement of Ivy League students, but I think there’s a maximizing, satisfying difference here at play, which you’ve written about quite a bit, that if you’re in the Ivy League school, you have been pressured to maximize constantly, to always look for the best, and the moment that you’re at the top of a curve, it suggests that you’re in the wrong system, and you’ve got to go find another elevator, essentially. Whereas, if you’ve been in a world where you’ve been encouraged more to satisfy and look for options that are good enough, then it’s a lot easier to say, “I found one. This is really, really great.”

Barry: There was a huge article in Newsweek maybe 20 years ago devoted to the topic of career building, and it asked, “When should you start looking for your next job?” The answer was the day you start your current one.

Adam: No. No.

Barry: Yes.

Adam: That’s a recipe for misery.

“It doesn’t surprise me that people who have been told that they’re great at everything in the world will take their success as a sign that they’re just not aiming high enough.”

Barry: Yes, it’s a recipe for being miserable every, single day you’re there, never appreciating what’s good about your job, always with your eye on the distant future. It’s catastrophic. It doesn’t surprise me that people who have been told that they’re great at everything in the world will take their success as a sign that they’re just not aiming high enough. The only way to know what’s enough is to have too much. The only way to know you’ve got a good job is to finally move to a job where you start to fail. What a dumb idea.

Adam: You’ve actually proposed a solution to this, which is that college admissions ought to be based on a lottery. It’s one of my all-time favorite op-eds. It drives my students insane every time I tell them about it. Walk us through the logic.

Barry: Sure. I taught for 45 years at Swarthmore, a very selective, liberal arts college outside of Philadelphia. You teaches at Wharton, a very selective, major university inside Philadelphia. We both know that places get 10, 15 applicants per spot. Of those 10 or 15 applicants per spot, at least a third, maybe half, could come and do fine.

Adam: Easily, maybe more.

Barry: What that means is that we are saying no to 75%, perhaps, of qualified people we would like to be able to say yes to. This is not just true at Swarthmore and Penn, it’s true at every institution in the country that’s selective to varying degrees. Stanford, which I think wins the prize as most selective, they’re saying no to 25 students for every one they say yes to. They could fill their class with people who have never gotten a B and got perfect SAT scores and still have to reject a bunch of perfect students. How do they do it?

They pretend that they do it by making these subtle distinctions among spectacular and merely unbelievably good. Nobody can make these distinctions. The error of measurement far exceeds the actual differences among the candidates, so you can’t get this right except by luck. Which means that they’re going to be saying yes to people that next year they might say no to, and no to people who next year they might say yes to. It’s a lottery that is disguised as a meritocracy. Why not be explicit and make it a lottery?

Every school has standards about what it takes to be successful. You articulate those standards, every student who meets those standards gets his or her name put into a hat, and then you choose a class randomly from the people who are good enough to meet the standards. It’s not really a random process. You have to be good enough to succeed at Wharton or at Swarthmore or at Harvard, but that’s all you have to be. You have to be good enough and lucky. I mean this from the bottom of my heart.

The reason I do is that we are ruining the lives of talented and enthusiastic high school students by essentially entering them into a zero sum game where the overwhelming majority of them will lose. We’re convincing them that there’s one right place for them to be, and if they don’t get into that right place, if they don’t get into Yale but they get into Penn, they feel like they’ve failed. We’re convincing Harvard and Penn that there’s one right student to take, and if they don’t get that student, they get some other student, they’ve failed.

It’s not only a waste of time and effort on the part of admissions people, it’s a waste of time and effort on the part of students who are taking SAT prep courses and going to college counseling strategists, having their parents write their essays, and being stressed beyond belief so that the incidence of clinical depression, substance abuse, and eating disorders among the most privileged people in the history of the world is just exploding.

It seems to me that doing a lottery would not only be honest—because that’s what it already is—it would puncture the pressure balloon for all these high school kids, and they could actually study what they’re interested in and do volunteer activities that they’re interested in, instead of trying to pad their resumes. We’d end up with better students because they’d spend more of their time developing their passions. I presented this a decade ago, and no one thinks I’m serious, except you.

Adam: I do. think it’s a brilliant idea.

Barry: No admissions office thinks that this is a serious idea. They think it’s an assault on them, which it’s not. I think they have an impossible job, and the thing to do is acknowledge that it’s an impossible job, and do it in a different way.

Adam: I wonder, why do you like that system better than the medical school residency matching process? Imagine saying to high school seniors, you’re going to apply to college, rank the schools in order of interest or fit or whatever criteria you have, the schools are then going to do the same, and we’ll optimize the number of matches that we make, and you can never feel like you should have gotten in somewhere else because you really only found out one place that you got in.

Barry: I can see the virtues in that. What makes me uncomfortable is that I don’t think people know enough about who they’re going to be and what they’re going to care about when they’re 18 for us to take a snapshot at that age and project that into the future in the way that a matching system might do.

“Of course, it’s hard to convince anyone that a lottery is a good idea because nobody wants to accept that important things in life are determined by chance. I think almost all of the important things in life are heavily influenced by chance.”

I’m astonished that people tolerate a matching system. It’s so un-American to take choice away from people. Of course, it’s hard to convince anyone that a lottery is a good idea because nobody wants to accept that important things in life are determined by chance. I think almost all of the important things in life are heavily influenced by chance.

Some people get opportunities and other people don’t. You can take lots of credit for taking advantage of opportunities, but I don’t think you can take very much credit for having the opportunities. People don’t in general make their own opportunities. Once in awhile they do, mostly they make the best of the opportunities that the world provides, and there’s nothing remotely meritocratic about who has these opportunities and who doesn’t.

In the Netherlands, they actually admit to medical school using a lottery. They do exactly what I’m suggesting, and the reason is they were getting too many qualified applicants, and they didn’t want to ratchet up the standards because they thought better academic records did not mean better potential doctors.

Adam: Wow.

Barry: They thought it might even conceivably mean worse potential doctors, so they just refused to ratchet up standards, and they went to a lottery. You apply, you don’t get in this year, apply again next year. The system seems to be working quite well.

Adam: In closing, you just gave a wonderful guest lecture in my class and talked to students about how to achieve success and happiness and how to think about their careers and their choice of marriages and all sorts of other big decisions we face in life. And you said something interesting, which is you’ve only ever dated one person—you married Myrna after you met at 14. And you also only had one job, and you had it for 45 years.

Barry: I only applied for one job.

Adam: Even better. How do you think about still having high standards when you’ve considered so few options?

Barry: When it comes to my life partner, I can’t even say that I had an idea because I was so young. We really hit it off, and I decided at the wise age of 14 that this is the person I wanted to spend my life with, and I’m lucky that my judgement at age 14 proved accurate. The reason I fell for her is that she was the first girl I met who was interested in watching baseball, which hardly seems like the criterion for making a life partnership.

With respect to the job, I cared about teaching, and I knew Swarthmore was a place that took teaching seriously. Really, the truth is that I applied for the job because it was in Philadelphia, and Myrna was still in graduate school, so it was a good job, and it wouldn’t turn our lives upside down. That was it. Then they gave me the job, and I discovered, as I learned more about the world of academia, that it wasn’t a good job, it was a great job. For me, it was the perfect job because it catered to what I was best at, one I got most meaning and satisfaction out of in a way that no university position I was aware of would.

It would be a lie to suggest that I had the remotest clue of any of that when I applied. I guess the lesson is you can have standards of good enough, with your eyes open so that you notice what’s unsatisfactory and the alternatives available. You’re not stuck in the decision forever. You’re alive to the possibility that you’ve made a mistake or that there’s a better option out there somewhere, you’re just not actively seeking it out. If it hits you in the face, you’ll notice, and you’ll grab it.

Adam: I think that’s a powerful message, and as you know, your name is something of a curse in our household because every time we encounter a situation where there are too many choices, my wife or I will say, “Oh, I just got Barry Schwartzed again.” In all the time that we’ve collaborated, being Barry Schwartzed is one of the best things that’s happened to me.

This conversation has been edited and condensed. The full video can be viewed below.