5 ms·

Pay Enough or Don't Pay at All

129 points by Panos 15y ago

iandanforth 15y ago
I'm surprised this doesn't mention blood donation as pay-for-blood schemes have been shown to reduce donations. This is the primary reason I'm aware of this effect.
vishaldpatel 15y ago
Something to keep in mind: Not paying works best when everyone thinks that everyone else is a volunteer.
corin_ 15y ago
Another side to think about is how people want others to see them. I happily donate blood (in the UK, where there aren't options to get paid for doing this), but if they started paying a small amount, I would feel that, by going in, people would see me and think "he's so desperate for money that he's donating blood to earn some". Same thing, say, volunteering in a charity shop (which I haven't done for a few years, not for reasons related to this). If I were to be offered pay, it would be too little for me to care about getting, and again I would, sadly, care that people would see me as the person whose job is in a charity shop, rather than the person who is volunteering his time for a good cause. It's a pretty petty way to think, and I don't always let the "but people will think..." win my internal argument. but it's usually there, and fairly often does sway my decision. (For the record, I don't care that people see me in a positive light, I'd be just as happy donating blood in such a way that no-one ever noticed me doing it, the bit I care about is when I feel I might be seen in a way that I don't like. Still pretty egotistical, but not quite as bad as wanting to show off, I think/hope.)
- smallblacksun 15y ago
  Lawyers are the same way. They either charge normal rates or work pro-bono. They almost never work for a reduced rate.
  - code_duck 15y ago
    Making any product available for a reduced rate reduces it's perceived value in the market... particularly something personally branded like law services or art.
  - ajkessler 15y ago
    Every firm I've worked for charges a variety of rates; they are absolutely negotiable. Charging less than your stated rate, particularly when you outline why you're charging that amount (as a favor, for a limited number of hours, for this case, etc.), isn't going to reduce your perceived value.
- Panos 15y ago
  Spot on. It is actually one of the explanations in the Gneezy and Rustichini paper: "consider the practice of paying back a small amount for recycling a soft drink bottle, which is common in many European countries. Anecdotal evidence suggests that people are less willing to recycle when this small compensation is offered, than they are in places where no money is offered, and failure to recycle is simply considered bad behavior. It is unlikely that the amount offered is considered insulting. A different explanation in this case might be that people are afraid of looking ‘‘cheap’’ for making the effort of recycling to collect the small amount."
  - corin_ 15y ago
    Interestingly, in my travels I can only recall coming across that system once, it was at a hotel in Germany and I was quite young, somethiong like 12-15 years old. Now days I recycle at home purely for the environment, but I don't think I cared much back then - whereas, with a vending machine that paid out when you returned a glass bottle, young me was very pleased to be able to do that, to help pay for the next bottle.
gyom 15y ago
I learned that lesson at Halloween a long time ago. My mother helped my friend and I sew our costumes (she basically did all the work). When my friend offered to give her some money for her help, she just replied that he wouldn't have enough money to pay her. At that moment, I achieved enlightenment.
Yxven 15y ago
I have been working on a subscription based website that would pay 70% of its revenue to its contributors. I'm sure the payout will be insignificant for minor contributions. Is being subscription based savable? (I don't think banner ads will pay enough to be worthwhile)
- jbri 15y ago
  Suggestion: Allow contributors to automatically donate their earnings to a charity. Much easier for minor contributors than collecting their individual payout and donating it themselves, probably more efficient for the charity as well (since you can pool it from everyone into a single donation), and brings back some of the "doing it for a good cause instead of for money" thing.
  - Yxven 15y ago
    I think that's a good idea. Thank you.
ikono 15y ago
In one of my favorite TED Talks, Barry Schwartz talks about this among other things. In it he tells a story about a study in Switzerland where a community was asked whether or not they would agree to a nuclear waste facility in their area. Amazingly 50% agreed, they then repeated the procedure but offered 6 weeks salary as well. This time only 25% agreed. He claims that as soon as the incentive is introduced people throw out their perceived responsibilities and instead focus on what is best for them. So instead of asking themselves whether or not they should, they ask themselves "is this a good deal for me".
- shrikant 15y ago
  Maybe they tell themselves, "If they have to offer money for something they're doing, maybe it isn't such a great thing thing after all."? Especially if you're asking the same people, of which 50% agreed initially.
cdesmar 15y ago
You are skipping an important step: prizes. Free->prizes->paid. Also things like free food, better internet, lab space are all great motivators. The message there is I can't afford to pay you what you're worth but I'll do what I can. WinPhone7 has a great community in London and I know a lot of people who are starting to express interest because MS is giving out xboxes and free phones and buying beer. $7/hr could have bought a lot of xboxes.
lionhearted 15y ago
Starbucks cards are a way to hack this. If you've got a limited budget and someone is putting in 5 hours of time for you and you give them $20, they might be unhappy as mentioned in the article. $20 Starbucks card? Sweet. Keeps it a social norm thing, even though it's almost a cash equivalent.
- JoachimSchipper 15y ago
  From http://www.mashmarketing.co.uk/blog/2010/02/12/friday-inspiration/ http://www.mashmarketing.co.uk/blog/2010/02/12/friday-inspir..., via an old HN post(?): "Get creative with compensation–use the iPhone Payment Plan. Imagine you’re a highly-trained software engineer. A crazy guy with a “startup” (i.e. me) approaches you about doing some work. Scenario #1: Dude, I’ll pay you $2,000 for 150 hours of work…3-4 months from now. Scenario #2: Dude, promise to build this and I’ll give you an iPhone right now [and] pay your phone bill. [...] We tried both approaches [...] and [...] Scenario #2 [...] actually worked out a lot better. There’s something about the psychology of receiving a cool gadget that doesn’t quite equal out to the cash equivalent. Also, paying up for the iPhone upfront fosters trust, which in turn boosts productivity."
  - chopsueyar 15y ago
    Plus, not having to directly deal with Verizon or AT&T is an added benefit.
diiq 15y ago
It's probably important to remember that money is not the only way to pay people --- I work at a job with low pay, but completely flexible hours, and for me, that benefit is worth twice the salary.
premchai21 15y ago
Obligatory story from the Old New Thing: http://blogs.msdn.com/b/oldnewthing/archive/2006/12/01/1184734.aspx http://blogs.msdn.com/b/oldnewthing/archive/2006/12/01/11847...

129 points by Panos 15y ago

I'm surprised this doesn't mention blood donation as pay-for-blood schemes have been shown to reduce donations. This is the primary reason I'm aware of this effect.

vishaldpatel 15y ago

Something to keep in mind: Not paying works best when everyone thinks that everyone else is a volunteer.

corin_ 15y ago

Another side to think about is how people want others to see them. I happily donate blood (in the UK, where there aren't options to get paid for doing this), but if they started paying a small amount, I would feel that, by going in, people would see me and think "he's so desperate for money that he's donating blood to earn some". Same thing, say, volunteering in a charity shop (which I haven't done for a few years, not for reasons related to this). If I were to be offered pay, it would be too little for me to care about getting, and again I would, sadly, care that people would see me as the person whose job is in a charity shop, rather than the person who is volunteering his time for a good cause. It's a pretty petty way to think, and I don't always let the "but people will think..." win my internal argument. but it's usually there, and fairly often does sway my decision. (For the record, I don't care that people see me in a positive light, I'd be just as happy donating blood in such a way that no-one ever noticed me doing it, the bit I care about is when I feel I might be seen in a way that I don't like. Still pretty egotistical, but not quite as bad as wanting to show off, I think/hope.)

smallblacksun 15y ago
Lawyers are the same way. They either charge normal rates or work pro-bono. They almost never work for a reduced rate.
- code_duck 15y ago
  Making any product available for a reduced rate reduces it's perceived value in the market... particularly something personally branded like law services or art.
- ajkessler 15y ago
  Every firm I've worked for charges a variety of rates; they are absolutely negotiable. Charging less than your stated rate, particularly when you outline why you're charging that amount (as a favor, for a limited number of hours, for this case, etc.), isn't going to reduce your perceived value.
Panos 15y ago
Spot on. It is actually one of the explanations in the Gneezy and Rustichini paper: "consider the practice of paying back a small amount for recycling a soft drink bottle, which is common in many European countries. Anecdotal evidence suggests that people are less willing to recycle when this small compensation is offered, than they are in places where no money is offered, and failure to recycle is simply considered bad behavior. It is unlikely that the amount offered is considered insulting. A different explanation in this case might be that people are afraid of looking ‘‘cheap’’ for making the effort of recycling to collect the small amount."
- corin_ 15y ago
  Interestingly, in my travels I can only recall coming across that system once, it was at a hotel in Germany and I was quite young, somethiong like 12-15 years old. Now days I recycle at home purely for the environment, but I don't think I cared much back then - whereas, with a vending machine that paid out when you returned a glass bottle, young me was very pleased to be able to do that, to help pay for the next bottle.

gyom 15y ago

I learned that lesson at Halloween a long time ago. My mother helped my friend and I sew our costumes (she basically did all the work). When my friend offered to give her some money for her help, she just replied that he wouldn't have enough money to pay her. At that moment, I achieved enlightenment.

Yxven 15y ago

I have been working on a subscription based website that would pay 70% of its revenue to its contributors. I'm sure the payout will be insignificant for minor contributions. Is being subscription based savable? (I don't think banner ads will pay enough to be worthwhile)

jbri 15y ago
Suggestion: Allow contributors to automatically donate their earnings to a charity. Much easier for minor contributors than collecting their individual payout and donating it themselves, probably more efficient for the charity as well (since you can pool it from everyone into a single donation), and brings back some of the "doing it for a good cause instead of for money" thing.
- Yxven 15y ago
  I think that's a good idea. Thank you.

ikono 15y ago

In one of my favorite TED Talks, Barry Schwartz talks about this among other things. In it he tells a story about a study in Switzerland where a community was asked whether or not they would agree to a nuclear waste facility in their area. Amazingly 50% agreed, they then repeated the procedure but offered 6 weeks salary as well. This time only 25% agreed. He claims that as soon as the incentive is introduced people throw out their perceived responsibilities and instead focus on what is best for them. So instead of asking themselves whether or not they should, they ask themselves "is this a good deal for me".

shrikant 15y ago
Maybe they tell themselves, "If they have to offer money for something they're doing, maybe it isn't such a great thing thing after all."? Especially if you're asking the same people, of which 50% agreed initially.

cdesmar 15y ago

You are skipping an important step: prizes. Free->prizes->paid. Also things like free food, better internet, lab space are all great motivators. The message there is I can't afford to pay you what you're worth but I'll do what I can. WinPhone7 has a great community in London and I know a lot of people who are starting to express interest because MS is giving out xboxes and free phones and buying beer. $7/hr could have bought a lot of xboxes.

lionhearted 15y ago

Starbucks cards are a way to hack this. If you've got a limited budget and someone is putting in 5 hours of time for you and you give them $20, they might be unhappy as mentioned in the article. $20 Starbucks card? Sweet. Keeps it a social norm thing, even though it's almost a cash equivalent.

JoachimSchipper 15y ago
From http://www.mashmarketing.co.uk/blog/2010/02/12/friday-inspiration/ http://www.mashmarketing.co.uk/blog/2010/02/12/friday-inspir..., via an old HN post(?): "Get creative with compensation–use the iPhone Payment Plan. Imagine you’re a highly-trained software engineer. A crazy guy with a “startup” (i.e. me) approaches you about doing some work. Scenario #1: Dude, I’ll pay you $2,000 for 150 hours of work…3-4 months from now. Scenario #2: Dude, promise to build this and I’ll give you an iPhone right now [and] pay your phone bill. [...] We tried both approaches [...] and [...] Scenario #2 [...] actually worked out a lot better. There’s something about the psychology of receiving a cool gadget that doesn’t quite equal out to the cash equivalent. Also, paying up for the iPhone upfront fosters trust, which in turn boosts productivity."
- chopsueyar 15y ago
  Plus, not having to directly deal with Verizon or AT&T is an added benefit.

diiq 15y ago

It's probably important to remember that money is not the only way to pay people --- I work at a job with low pay, but completely flexible hours, and for me, that benefit is worth twice the salary.

premchai21 15y ago

Obligatory story from the Old New Thing: http://blogs.msdn.com/b/oldnewthing/archive/2006/12/01/1184734.aspx http://blogs.msdn.com/b/oldnewthing/archive/2006/12/01/11847...