A new neurological study suggests reward mechanisms in the brain depend on how well you think other people are doing says Laura Blue writing in Time.
The findings, published in the journal Science are the first to lend physiological proof to a longstanding theory among contemporary economists: that people are affected not only by their own achievements and income, but also by how they stack up against their neighbors.
Cognition experts and economists at the University of Bonn in Germany looked at the brain regions that process reward. “In a sense it goes back to Aristotle,” says the paper’s senior author, Armin Falk, an economist. “The fact that we are social beings is a well-known fact.”
The idea that rewards are context-dependent challenges a key assumption behind most traditional of economic theories: the premise that humans are essentially self-interested, that they care about their own work, income, achievements, and purchases, and that whatever other people do is, if not irrelevant, at least not going to have a consistent or predictable effect on decision-making.
According to Falk there’s a lesson here for company managers.
It turns out the negative response to earning less is usually stronger than the positive response to earning more or as Falk says, “The pain of having less is much stronger than the joy of having more.”
Workers who discover they’re earning more for the same work may be happy, but those who earn less can quickly feel slighted, killing motivation and often the quality of their output. It doesn’t take a brain specialist to understand how that affects a business.