Financial Times FT.com

Dear Economist

By Tim Harford

Published: March 16 2007 16:52 | Last updated: March 16 2007 16:52

I cannot help being fair when giving presents or rewards, even though I may actually want to give differently or the recipients may in fact deserve differently. I only differentiate between groups (my children, my nephews and nieces, my friends etc), but not within each group. Not wanting to show favouritism or cause rivalry, I give a present of equal value to every member of a group.

Were businesses to follow my example such “incentives” would no longer serve as a motivating tool. But then, this could also mean no ill feelings or disharmony, right?

Aidida Rosenstock, Germany

...................................................................................................................................................

Dear Aidida,

I am not sure why you think there would be so much harmony in a workplace where lazy, incompetent and rude workers are paid the same as the industrious, capable and affable. Still, you have a point. Research on competitive pay schemes shows that workers are, indeed, motivated by them - taking fewer days off, for example. But they also encourage staff to stab colleagues in the back by refusing to share equipment. Employers must judge whether the motivation for self-improvement outweighs the damage caused by poor team work.

I am more interested in why you adopt such odd principles yourself. Are you truly indifferent to whether your children become beach bums or bankers? The right incentives could work wonders.

Even if all that matters to you is fairness, you should pay attention not to how much you yourself give, but to how much each child - or friend - has after the gift has been given. The millionaire and the pauper receive the same from you, which means you are defining “fair” from an egocentric standpoint. No doubt this minimises your own effort and embarrassment. How selfish.

Questions to economist@ft.com

More from this columnist

Perhaps microfinance isn’t such a big deal after all

Dear Economist: Did Thierry’s head inform his hand?

Political ill wind blows a hole in the climate change debate

Dear Economist: Should I stay single in Italy – or come home?

Dear Economist: I love Walmart: my wife hates it. Help!

It’s not just Scrooge who wants Christmas abolished

Dear Economist: How can I be fair to my grandchildren?

Given the choice, how much choice would you like?

Dear Economist: Why a ‘pointless’ tax cut really counted

How a celebrity chef turned into a social scientist

Why feedback can be just so much noise

Left column content

Tim Harford

Undercover Economist

Tim Harford

Economics blog: Tim Harford writes ”The Undercover Economist”, about economics in everyday life, and ”Dear Economist”, in which readers’ questions are answered, tongue-in-cheek, with the latest economic theory

Join the discussion

Share your views on this column with Tim Harford and other FT readers

Market-moving economics

FT.com RSS Feeds

FT Lexicon