The Effect of Personal and Philanthropic Gain-Loss Incentives on Motivation

21 Pages·2017·1.1 MB·English

by  Sasha Davis

The Huron University College Journal of Learning and
Motivation
Volume 45|Issue 1 Article 4
2007
The Effect of Personal and Philanthropic Gain-Loss
Incentives on Motivation
Sasha Davis
Follow this and additional works at:https://ir.lib.uwo.ca/hucjlm
Part of thePsychology Commons
Recommended Citation
Davis, Sasha (2007) "The Effect of Personal and Philanthropic Gain-Loss Incentives on Motivation,"The Huron University College
Journal of Learning and Motivation: Vol. 45 : Iss. 1 , Article 4.
Available at:https://ir.lib.uwo.ca/hucjlm/vol45/iss1/4
This Article is brought to you for free and open access by the Psychology at Scholarship@Western. It has been accepted for inclusion in The Huron
University College Journal of Learning and Motivation by an authorized editor of Scholarship@Western. For more information, please contact
[email protected], [email protected].
42
Loss Aversion and Altruism:
The Effect of Personal and Philanthropic Gain-Loss Incentives on Motivation
Sasha Davis
The present experiment examines the effects of personal versus
philanthropie incentives and the framing of the incentive as Toss' and
'gain' on motivation, as measured through performance on a 10-item
anagram task. While a main effect revealed increased motivation
for participants in the 'loss' {M = 7.70) versus 'gain' (M = 5.60) incentive
situations, the personal versus philanthropic 'incentive recipient'
dimension yielded neither a significant main effect nor an interaction
with the 'framing' dimension. These results further support Tversky
and Kahneman's (1979) theory of loss aversion and, contrary to the
experimental hypothesis, extend this phenomenon to charity incentive
situations.
Contrary to assumptions of the early 20' century, economic decisions are not
always founded on rationality. Since its emergence in the 1970s, the field of behavioural
economics has offered useful contributions to psychologists and economists alike. Social
cognition and emotional bias have demonstrated to profoundly impact our perception of
economic decisions; however, little has been investigated regarding how these cognitive
and emotional biases affect our motivation to donate to charity—or how these biases
affect our motivation, as opposed to decision-making, altogether. This study was intended
to examine the effects of personal versus philanthropic incentives in framed 'loss' and
'gain' situations.
The most notable evidence of our irrational perception of monetary losses and
gains is demonstrated by the Prospect Theory Model. Originally, this model was
introduced by Amos Tversky and Daniel Kahneman (1979) to describe how individuals
43
weigh their losses and gains in decisions involving risk. According to this theory,
individuals evaluate the possible outcomes of their decision in relation to a reference point
that divides losses from gains. Instead of measuring sueh outcomes as absolute values,
any value below this reference point is considered a loss, while a value greater than that of
the reference point is considered a gain. Tversky and Kahneman (1992) found that the
psychological impact of losses is consistently more powerful than that of gains. That is to
say, the pain experience of a loss is greater than the pleasure experience of a gain (Idson,
Liberman, & Higgins, 1999). Moreover, a decision is highly influenced by the way in
which a problem is presented, known as framing. Though irrational, individuals would
much rather avoid and mitigate losses than acquire gains, even in circumstances in which
the outcomes are equal in both situations. This phenomenon is known as loss aversion,
and has been frequently demonstrated in the context of decision making.
In their now-classic paradigm, Tversky and Kahneman (1981) asked a
representative sample of physicians to make a decision between two vaccination
schedules that would save a country from disease. In one choice, the survival probability
was expressed as a gain (the proportion of people who would be saved by the
vaccination). In the other choice, the probability was expressed as a loss (the proportion of
people who would die from the vaccination). Though the vaccination schedules were
identical, 72% of the sample chose the first frame, which was expressed as a gain, only
28% of the sample chose the latter frame, which was expressed as a loss. This study,
supported by multiple replications and variations, demonstrates that people tend to choose
the schedule that promotes the least number of deaths, rather than that with the greatest
number of people saved (Idson, et al, 1999; Tversky & Kahneman, 1981). Moreover, in
44
situations in which gains and losses are viewed as incentives, the Prospect Theory should
predict that individuals would be more motivated to prevent the loss of their reward than
to acquire a gain from nothing in the first place.
As previously stated, the current study examines the phenomenon of loss aversion
in the context of selfless monetary incentives. A variety of empirical research
demonstrates that individuals are often reluctant to help others in relation to their
willingness to help themselves (Petri & Govern, 2G04). Helping behaviours have been
viewed to have a combination of altruistic and egoistic motivations. Altruism refers to the
notion that individuals help others as a form of unselfish regard for their welfare. This
genuine altruism has been shown to be driven by empathy, which is particularly exhibited
by individuals who tend to imagine themselves in the positions of the less fortunate
(Coke, Batson, & McDavis, as cited by Petri & Govern, 2004). In contrast, egoism refers
to the doctrine that helping behaviours are in fact motivated by the desire to increase
one's own self interest (Myers & Spencer, 2006; Petri & Govern, 2004).
A study conducted by Isen (1970) examined some of the individual factors that
might dispose an individual to carry out acts of generosity and altruism. Participants of
this study were exposed to a series of tasks that led to 'success' or 'failure', which were
arbitrarily determined by scores that apparently fell either above or below average,
respectively, as informed by the experimental instructor. Contributions to a charity and
helpfulness towards a confederate were measured following the 'successfuT or 'failed'
completion of these tasks. Those in the "suecess" condition scored significantly higher in
both charitable generosity and helpfulness towards a confederate, suggesting a
relationship between the positive emotions evoked by success and motivation to help
45
others. This phenomenon, known as the "warm glow of success" hypothesis, served as
one Of the foundations to explaining how internal dispositions and emotional responses
are related to generosity and helping behaviours (Isen, 1970). In collaboration with
Tversky and Kahneman' s(1979, 1981) Prospect Theory, perhaps the sense of
accomplishment achieved from 'gain' incentive leads to a similar emotional response as
that achieved from 'successful' tasks. Similarly, 'loss' could be associated with the
emotional responses elicited by a sense of failure.
It is important to note that philanthropie incentives elicit different emotional
responses than self-serving incentives, and thus, different motivations. According to
Mowrer's theory of emotional incentive motivation, behaviours will be reinforced if
positive emotional responses are elicited by the incentives, or emotional stimuli, of an
event (Petri & Govern, 2004). In accordance with the experimental hypothesis of the
proposed study, although the monetary incentive object itself will remain constant across
experimental groups, the emotional incentive will vary between groups depending on
whether the incentive object will ultimately be received by the participant, or by a charity.
I predict that those in the philanthropic condition will be motivated by the positive
emotional responses, such as pride and fulfillment, achieved in the act of helping others.
Because this experiment examines the motivational component of behavioural
economics, there are several other theories from the realm of motivation that also
influenced the research hypotheses. According to Rotter's social learning theory, one's
performance in an event depends on a combination of the event's reinforcement value and
one's expectations in achieving success. Reinforcement value refers to the extent to which
a reinforcer is desirable to an organism (Petri & Govern, 2004). The reinforcement value
46
in the personal incentive condition is expected to be higher than that of the philanthropic
incentive, simply due to human egocentricity. Therefore, in the present study it was
hypothesized that the participants would achieve higher performance scores when
motivated by personal, as opposed to philanthropic, monetary incentives. This was
expected to express itself as a main effect for the independent variable, "incentive
recipient", representing higher performance scores for participants in the 'personal
incentive' condition as opposed to those in the 'philanthropic incentive' condition.
Another theoretical underpinning of the proposed experiment is the distinction
between extrinsic and intrinsic motivation. While extrinsic motivation refers to the
motivation of attaining external goals through activity or performance, intrinsic
motivation refers to the "value or pleasure associated with an activity as opposed to the
goal toward which the activity is directed" (Petri & Govern, 2004, p. 359). Furthermore,
research demonstrates that the presence of rewards can diminish the intrinsic motivation
to perform well (Deei, Koestner, & Ryan, as cited by Petri & Govern, 2004). Because the
anagram task that was used in the present study has little value or meaning in a person's
life, it was predicted that individuals in the personal incentive condition would be more
extrinsieally motivated by the monetary goal object than the intrinsic sense of personal
achievement. Therefore, when this goal object was presented at the onset of the
experimental session (in the loss condition), the individual was expected to be highly
motivated to preserve this money, as opposed to being motivated by a sense of
achievement (which is expected to be stronger in the framed 'gain' situation).
Philanthropy, on the other hand, cannot be directly motivated by monetary eamings, but
rather by the very act of helping others. Therefore, individuals in the philanthropic
condition were, contrastingly, expected to be solely motivated intrinsically. The sense of
47
achievement that drives helping behaviours in the first place was expected to evidently be
stronger in the 'gain', as oppose to 'loss' conditions, thus supporting the hypothesized
interaction between the two independent variables.
Additionally, according to Rogers's theory of growth motivation, humans are
motivated to optimize their full potential through the testing and improvement of our
capacities (as cited by Petri & Govern, 2004). Part of this motivation involves the need to
affect our environment, which is referred to as personal causation. According to White
and deCharms, we strive to be "causal agents" in our environments (Petri & Govern,
2004). This notion of personal causation helps explain the intrinsic motivation of
philanthropy. In the philanthropic condition, the 'gain' situation was expected to yield a
greater sense of personal causation than the 'loss' condition, as those in the 'gain'
condition were predicted to be more mindful of their personal achievements in solving the
anagrams, while those in the 'loss' condition were predicted to be more attentive to their
errors, resulting in a weakened sense of personal causation. It was predicted that this
notion of personal causation will contribute to the hypothesized higher performance
scores, hence motivation, in the 'philanthropic-gain' group relative to the 'philanthropic-
loss' group.
Overall, it was hypothesized that participants in the 'philanthropic-gain' group
would obtain higher performance scores, and thus motivation, on the anagram task than
the 'philanthropic-loss' group, while those in the 'personal-gain' group would perform
better than those in the 'personal-loss' group, resulting in an interaction. Moreover, it was
predicted that the 'personal incentive' condition would re-affirm Tversky and
Kahneman's theory of loss aversion; however, this phenomenon was not expected to
48
extend to philanthropic incentives. Additionally, the overall 'personal incentive' condition
was hypothesized to elicit higher performance scores than the overall 'philanthropic
incentive' group, based on a stronger human tendency to act in response to egoism, as
opposed to altruism.
Method
Participants
This sample was comprised of 20 university students ranging from approximately
18 to 22 years of age. Participants were admittedly recruited through a method of
convenience; hence, all participants were peers, acquaintances, or classmates of the
researcher. All were enrolled at the University of Western Ontario (UWO) or Huron
University College, a small affiliated college of UWO that specializes in social sciences
and the liberal arts. Although sex is not a variable in this study, the sample was roughly
equally composed of males and females in order to represent the sex ratio of the general
population. Though no socio-economic sample limitations were implemented, the
partieipants were predominantly affluent and Caucasian, and permanently resided in
central and suburban areas of Toronto, Ontario. Furthermore, psychological stability and
cognitive health was assumes across all partieipants.
Materials
A single sheet of paper and writing utensil was used by each participant for the
completion of the anagram task, which was used to measure performance, and thus
motivation. A stopwatch was also used to track the 20-minute time limit.
The use of performance scores to measure motivation is supported by Tolman's
theory of purposive behaviour. According to Tolman, an absence of performance does not
necessarily suggest a lack of learning, but rather a lack of motivation (as cited by Petri &
49
Govern, 2004). Furthermore, anagrams cannot be learned, and are thus assumed to reflect
motivation as opposed to learning.
The anagram task consisted of 10 jumbled words ranging from five to six letters in
length. The words belonged to various semantic categories, but were all relatively
common and frequent in the English language; nevertheless, no measures were used to
control word frequency or level of difficulty of the anagrams, themselves. See
Appendix A.
The statements that preceded the series of anagrams for each experimental group
varied accordingly, based on the incentive frame and recipient. The written statements
assigned to each version of the anagram task are included in Appendix B.
In addition, a researcher-provided fund of $40 was used to reward both the
individuals in the 'personal incentive' conditions, as well as the Canadian Cancer Society,
for which those in the 'philanthropic incentive' condition collectively raised money. The
Canadian Cancer Society is a volunteer-based organization whose goal is to support
cancer research and improve the quality of the lives of people living with cancer. This
charity was chosen based on the presumption that it is viewed, nation-wide, as a reputable
and worthy organization that is relevant, or at least relatable, to the lives of all
partieipants. Also, those who benefit fi-om this charity are universally viewed as innocent
people in need of societal support.
Procedure
Prior to experimentation, the participants were randomly assigned to one of the
two experimental conditions from each of the two independent variables, "incentive
recipient" and "incentive frame". For the "ineentive recipient" dimension, half the
partieipants were assigned to the "personal incentive" condition, while the other half were
50
assigned to the "philanthropic incentive" condition. Each of these were equally divided
into 'gain' and 'loss' "incentive frames", resulting in a 2x2 ANOVA experimental design.
Each participant was tested individually in a quiet, well-lit room. All experimental
sessions took place during the afternoon or evening. Before the study was initiated, the
participant was asked to read and sign a consent form.
At the start of the experimental session, only those in the 'loss' condition were
verbally informed by the experimental instructor that they have received two dollars for
either themselves (personal incentive condition), or for the Canadian Cancer Society
(philanthropie incentive condition), for their participation in this study. For the complete
statements verbalized by the instructor, see Appendix B.
The participants in the 'loss' frame immediately received the anagram task
following the aforementioned statements. In the absence of any such verbalized statement,
those in the 'gain' frame received the anagram task following their written consent to
participate in the study. On the anagram task, each of the four experimental groups
received a different set of written instructions, included in Appendix A, as previously
stated. Each participant was given exactly 20 minutes to complete this task.
The experimental instructor remained in the room through the length of the session
and partieipants were not allowed to leave the room during testing. While questions
regarding instructional clarification and time remaining to complete the task were
answered by the instructor, requests for hints and answer verification remained
unanswered.
The session was complete when the participant submitted his or her test to the
instructor, or when the 20-minute time limit was up. Because the dependent variable in
this study was motivation, statements of self-defeat such as "I give up" were replied by