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Motivation and emotion/Book/2024/Money and motivation

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Money and motivation:
How does financial incentive influence motivation?

Overview

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How does money motivate us?

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Figure 1. Coins

Money is considered to be a major motivator when it comes to work, personal goals, and education. This chapter explores the effect money has on motivation and how it motivates us in both a positive and negative way. Understanding how money can be used as a motivator is vital for organisations and people to improve morale and performances.

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Case study: Jasper works in coding and loves what he does. He has recently been offered a job with the goverement doing work that he is not as intrested{{sp}} in but pays almost double what he is making now. He decides to make the job for the financal security but after 3 months starts to dread going into work and is already getting tired of his coworkers. He used to love his job and although he is making a lot more money, he is struggling to find motivation to work

Key points

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Sustainable motivation

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  • What are some long term effects of relying on money as a motivator?

Affect on intrinsic motivation

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Affect on purpose and passion

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  • Does money affect ones purposes and passions in life?

Theories of motivation and money

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Motivation crowding theory

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  • Frey and Reto Jegen (2000) proposed the idea of motivation crowing theory. This is when external interventions, such as money in this case, can 'crowd out' intrinsic motivation.

Extrinsic motivation

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  • Extrinsic motivation involves doing an action for the purpose of gaining external rewards (Morris et al., 2022).

Intrinsic motivation

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  • Intrinsic motivation is the enjoyment that comes from the activity itself rather than any rewards. This can be affected by money as relying on financial gain can lower intrinsic motivation and create external control (Ryan et al., 1983).

The role of money in different contexts

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Work and employment

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  • Job satisfaction is not always about money (Li-Ping Tang et al., 2000).
  • Focusing on too much money can lead to job dissatisfaction.
  • Non-monetary incentives such as career opportunities, recognition, and enjoyable work can lead to better performances among employees (Abdullah, & Wan, 2013).

Education and learning

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  • Scholarships can motivate students to work harder and improve marks (Reed & Hurd, 2014).
  • Can also take enjoyment out of learning and lower motivation.

Personal goals

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  • Money can help people to achieve goals by realising any financial stress and help to purse their true passions.
  • Saving money can be a big motivator as it normally means completing long term goals or ambitions (Hryniewicz, 2019).

Learning feature

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  • Add a quiz

See also

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Financial investing, motivation, and emotion

Employee motivation and money

Intrinsic and extrinsic motivation

References

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Abdullah, A. A., & Wan, H. L. (2013). Relationships of non-monetary incentives, job satisfaction and employee job performance. International Review of Management and Business Research, 2(4), 1085

Frey, B. S., & Reto Jegen. (2000). Motivation Crowding Theory. Hryniewicz, K. (2019). Motivation and Action Control in a Saving Lifestyle. WSB Journal of Business and Finance, 53(1), 144–160. https://doi.org/10.2478/wsbjbf-2019-0014

Li-Ping Tang, T., Kim, J. K., & Shin-Hsiung Tang, D. (2000). Does attitude toward money moderate the relationship between intrinsic job satisfaction and voluntary turnover? Human Relations, 53(2), 213–245. https://doi.org/10.1177/a010560

Morris, L. S., Grehl, M. M., Rutter, S. B., Mehta, M., & Westwater, M. L. (2022). On what motivates us: A detailed review of intrinsic v. extrinsic motivation. Psychological Medicine, 52(10), 1–16. https://doi.org/10.1017/S0033291722001611

Reed, R. J., & Hurd, B. (2014). A value beyond money? Assessing the impact of equity scholarships: from access to success. Studies in Higher Education, 41(7), 1236–1250. https://doi.org/10.1080/03075079.2014.968541

Ryan, R. M., Mims, V., & Koestner, R. (1983). Relation of reward contingency and interpersonal context to intrinsic motivation: A review and test using cognitive evaluation theory. Journal of Personality and Social Psychology, 45(4), 736–750. https://doi.org/10.1037/0022-3514.45.4.736


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https://en.wikipedia.org/wiki/Motivation_crowding_theory

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