Regulation, distrust, morale, intrinsic and extrinsic motivation

http://www.galleryperth.com/artists-images/Stephen%20Clarke/Large/DistrustToo.jpgNote to self: Where morale is high – for instance in a workplace or a community – at least some regulations – for instance dome designed to make sure people don’t cheat or free ride are unnecessary as very few people do this and when they do they are detected and sanctioned. Introducing regulation to outlaw free riding or cheating will sometimes offend people doing the right thing and, in offending them, undermine their own morale and preparedness to ‘do the right thing’.  Regulation can thus crowd out very good behaviour. Yet the bad behaviour that might follow may well call forth public support for the regulation.  Once things have broken down like this – regulation may indeed be better than the alternative of no regulation.

As we know from lots of experiments – or just from thinking about a situation in which you thought the dinner party a friend invited you to that you offered them a tip – extrinsic and intrinsic motivation have an uneasy and not very well understood relationship to one another.

This is all rather crudely put – I apologise – this is genuinely a note to myself so I can look this stuff up later. But in the meantime, the point of this post is to point to similar conclusions of an NBER cross-country study Regulation and Distrust. The issues here are sufficiently subtle that I’m not too sure a cross country study is the best way to consider the issues, but given the value accorded to such things in the profession, and given that the results turn up in cross country studies, I guess that’s pretty interesting and also perhaps persuasive.

In a cross-section of countries, government regulation is strongly negatively correlated with social capital. We document this correlation, and present a model explaining it. In the model, distrust creates public demand for regulation, while regulation in turn discourages social capital accumulation, leading to multiple equilibria. A key implication of the model is that individuals in low trust countries want more government intervention even though the government is corrupt. We test this and other implications of the model using country- and individual-level data on social capital and beliefs about governmentâs role, as well as on changes in beliefs and in trust during the transition from socialism.

Anyway, I’ve not yet read the paper, and won’t till I do some work on regulation again

2 thoughts on “Regulation, distrust, morale, intrinsic and extrinsic motivation

  1. Introducing regulation to outlaw free riding or cheating will sometimes offend people doing the right thing and, in offending them, undermine their own morale and preparedness to do the right thing

    Yeah in Ricardo Semlar’s Maverick one of hi9s reforms was to discontinue the practice of security searches of workers leaving. As he said they’re adults and it’s infuriating to be treated this way. I’ve noticed that staff at Borders and Gloria Jeans have to submit to searches on the way out. This isn’t just infuriating it’s downright stupid. It says to any would be book thieves: hey the electronic surveillance schtick doesn’t work.

    But back to Semlar. He reformed a firm around principles of openness and democracy not out of some ideal but to relieve himself of work stress. It was a difficult process especially considering that it happened in Brazil! not especially famous then for industrial peace and cooperation. Thing is wasn’t just a political reform, ie one of structural adjustment; but an ethical reform, one of interpersonal changes in attitude and behaviour.

    A lot of regulation stems from a lack of ethics. For example if those dudes who sold loans to whoever based on no collateral at all and then on-sold ‘em and so on – if those guys had an ethos that caused ‘em to stop and think about wider implications for a second they may have realized that what was temporarily good for them, would be bad for the world eventually. They don’t. So now we’re back to a stranglehold economy.

    Live and learn, or don’t. Just bear in mind that often when we say “oh that’s terrible someone should do something about it” what we mean is that the government should write a law. Often laws don’t work. Society does. Yet because we feel we need permission or authority to effect change we don’t act. Result mountains of rules and grumpy people.

  2. Introducing regulation to outlaw free riding or cheating will sometimes offend people doing the right thing and, in offending them, undermine their own morale and preparedness to do the right thing. Regulation can thus crowd out very good behaviour.

    I’ve read the paper and this line of causality doesn’t make an appearance as far as I can tell. The independent variable is the level of trustworthiness in business and government. Untrustworthiness leads to higher regulation, and where regulation is reduced in the presence of untrustworthy business/government, the model returns to a higher level of regulation.

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