Success Breeds Success: The Decision Behind Hard Work

Posted byEconrcPosted inEconomic Research Centre

Success Breeds Success: The Decision Behind Hard Work

Imagine this: you’re sitting down with a group of people, ready to work. Before anything begins, you pull a card from a deck. Maybe you’re lucky, and your card promises big rewards for your effort. Or maybe you’re unlucky, and no matter how hard you work, the rewards will be small. Now, when do you find out what your card says – before you start working or after you’ve put in the effort?

This decision of when we know our fate plays a critical role in how hard we try. Some of us put in the effort because we expect it will pay off. Others, believing there’s no reward waiting at the finish line, might give up altogether. In this sense, having hope – the ability to see that your hard work will be rewarded – is a privilege in itself.

 

A Tale of Effort and Luck

In school, for example, students who earn good grades are often seen as hard-working and rewarded with praise. But why do some students put in the effort, while others do not? The answer may lie in a concept economists often discuss: incentives.

Let’s dive into a story explored by economist Peter Andre in his paper Shallow Meritocracy. In his experiment, two groups of people were asked to complete tasks online, but not everyone was set on an equal playing field. Some were lucky, receiving high pay for their efforts, while others were unlucky and received much less – no matter how hard they worked. There were also “judges,” a separate group of observers who could decide whether or not to redistribute the earnings based on fairness.

The experiment was run twice. The first time, participants didn’t know whether they were lucky or unlucky until after they’d worked. Everyone, regardless of their fate, put in effort, driven by the belief that more work would lead to more rewards. One lucky participant, Adrian, worked 100 hours and earned $500, while an unlucky participant, Ben, put in the same hours but only earned $100.

The judges, seeing the disparity, decided to redistribute some of Adrian’s earnings to Ben, as they felt it was only fair given the circumstances. Does this remind you of how, in real life, we sometimes tax the wealthy to help those who are less fortunate?

In the second experiment, the scenario changed. This time, Adrian and Ben were told upfront whether they were lucky or unlucky before they began working. Adrian knew his effort would yield high pay, while Ben knew he’d be working at a disadvantage. Armed with this knowledge, Adrian doubled his efforts, working 200 hours and earning $1000. Ben, seeing no hope in his situation, cut back to 20 hours, earning only $20.

Now, here’s where the judges’ decision becomes interesting. This time, they chose not to redistribute the earnings. They saw Adrian’s increased effort and concluded that he deserved to keep all his money. Ben, they reasoned, didn’t work hard enough. But was that really the whole story?

 

The Information Sets: What Did They Know?

In both experiments, the key factor that influenced the decisions wasn’t just luck – it was when the participants knew their fate. In the first experiment, neither Adrian nor Ben had the information ahead of time; they both worked with hope. But in the second experiment, that information came upfront, and it changed everything.

As you reflect on these experiments, consider whether Adrian and Ben expected the presence of the judges, this separate group of decision-makers, before they started working. Did they know that their pay could potentially be shuffled around? Or were they caught by surprise? This information – or lack thereof – shaped not just their effort, but the outcome.

 

What Would You Do?

Now, imagine you’re in their shoes. If you were lucky Adrian, would you feel justified in keeping all your hard-earned money? And if you were unlucky Ben, would you feel like the system had failed you? As a judge, would you redistribute the earnings, or would you let the rewards stand as they are?

These questions aren’t just theoretical. They touch on real-world issues of fairness, motivation, and privilege. We often judge people’s success by their visible effort and outcomes, but what about the circumstances that shaped their decisions? Could the ability to work hard itself be a privilege – one that not everyone has access to?

 

A Critical Lens

If you’re curious about exploring this further, you can read Peter Andre’s paper through the link in Further Reading below. But remember, as with any academic study, it’s important to think critically about the findings.

Consider the design of the experiment. Were the participants randomly assigned to their lucky or unlucky fates? Was the sample size large enough to draw meaningful conclusions? And importantly, does this experiment reflect real-world situations, or are the conditions too controlled to be generalized?

In evaluating these questions, you can gain a deeper understanding of both the study and the broader implications it raises about work, reward, and the role of privilege in shaping our decisions.

 

Final Thought: The Judges’ Role

In the second scenario, the judges didn’t compensate Ben, despite the clear disadvantage he faced. They based their decision solely on the visible effort and outcomes. But does that mean they overlooked how circumstances beyond Ben’s control affected his choices? Or were they simply following a strict meritocratic logic, where effort is rewarded regardless of the starting point?

As we think about fairness in our own lives – whether in schools, workplaces, or society at large – these questions challenge us to reflect on how we create more equal opportunities for everyone, not just those lucky enough to see hope in their hard work.

 

Further Reading

  1. Peter Andre, Shallow Meritocracy, The Review of Economic Studies, 2024;, rdae040, https://doi.org/10.1093/restud/rdae040
  2. Relevant Econ talk and podcast
  3. George A. Akerlof, Janet L. Yellen, The Fair Wage-Effort Hypothesis and Unemployment, The Quarterly Journal of Economics, Volume 105, Issue 2, May 1990, Pages 255–283, https://doi.org/10.2307/2937787
  4. Kristoffer B Hvidberg, Claus T Kreiner, Stefanie Stantcheva, Social Positions and Fairness Views on Inequality, The Review of Economic Studies, Volume 90, Issue 6, November 2023, Pages 3083–3118, https://doi.org/10.1093/restud/rdad019