Why Paying People More Doesn’t Always Work: The Science of Motivation You Need to Know

It’s intuitive to think that offering more money will make people work harder and better. But decades of research challenge this assumption, showing that for complex, creative tasks, external rewards can actually undermine motivation.

One landmark study involved children playing with puzzles called Soma cubes. When they were promised a reward for solving the puzzles, their interest dropped sharply once the reward was removed. This phenomenon, known as the Sawyer Effect, reveals that extrinsic incentives can turn enjoyable activities into chores.

Neuroscience sheds light on why this happens. Monetary rewards stimulate dopamine release in the brain’s reward centers, similar to addictive drugs. While this may initially boost motivation, it can also create a dependency on external rewards and reduce intrinsic drive. It can lead to risk-taking and poor decision-making, as the brain chases the dopamine hit rather than focusing on the task itself.

Behavioral economics further complicates the picture. Experiments such as the ultimatum game reveal that humans are not purely rational actors maximizing financial gain. People often reject unfair offers, sacrificing money to uphold fairness and social norms. This challenges the traditional economic model of 'homo economicus' and highlights the importance of intrinsic motivations like fairness and purpose.

For leaders and organizations, these insights mean rethinking incentive structures. Instead of relying solely on bonuses and punishments, fostering autonomy, mastery, and purpose creates more sustainable motivation. Giving employees control over their work, opportunities to grow skills, and a connection to meaningful goals leads to higher engagement and innovation.

In sum, money alone is not the magic motivator it’s often assumed to be. Understanding the science behind motivation can help create environments where people thrive intrinsically, delivering better results and greater satisfaction.