Ministerial pay hike: A social psychological perspective

April 18, 2007
Singapore Democrats

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18 Apr 07

One of the arguments forwarded by the government to justify their recent incredible pay hike is that such humongous salaries are necessary to attract and maintain quality people in the leadership. What I find lacking in their defense is the lack of a definition for the word “quality.”

Quality can be construed to mean different things by different people. If by “quality people,” the government meant people who care deeply for the nation and who would serve it with passion and devotion, then their formula is absolutely wrong.

For about three-and-a-half decades, psychologists have observed a phenomenon called the overjustification effect. In an experiment at the Stanford University, three groups of children were given magic markers to draw as they please. One group was told they would be given an reward if they drew some pictures for the experimenters. The second group was not given any instructions beforehand but was rewarded unexpectedly after they drew. The third group was not promised a reward and none was given.

After more than a week, behavioral measures found that children in the second (unexpected reward) and third (no reward) groups continued to show interest in drawing, whereas children in the expected reward group displayed a striking reduction in their interest in the activity.

The reason behind these observations is that the children who expected a reward interpreted their engagement in the activity as be extrinsically (or externally) motivated and not intrinsically (or internally) motivated. In other words, external reward has undermined internal interest—hence the overjustification effect.

The same phenomenon has been observed in many situations and among professionals such as highly paid footballers and collegiate athletes.

Are political and corporate leaders exempted from the rules? I think not. If we compared an entrepreneur’s level of passion for his business and that of a highly paid corporate COE, whom do you think is more passionate about the business? Many people would pick the former, and correctly so.

If big rewards do not create passion, what does? Challenges do, according to psychologist Mihaly Csikszentmihalyi, who studied scores of high achievers, including Nobel laureates. People are addicted to challenges, and we are often far happier while working toward a goal that stretches us to the limits of our abilities.

If our ministers have the quality of high achievers, what they need as motivators are challenges, not money, which they already have aplenty. (In a speech, during the last election, PM Lee indicated that having more opposition MPs in parliament would provide him and his colleagues with immense challenges. Perhaps we should do them that favor.)

To be sure, I am not suggesting that ministers should not be paid, and paid handsomely. Of course, the question that follows is: What is a reasonable amount? Allow me to digress a little before I answer that question.

Now that the ministers have their pay increased, do you think they are happier than they were before the raise? My guess is not much, if any, and my prediction is pretty soon they will be back for more.

Research shows that we have a tendency to overestimate how much satisfaction we will derive from having more. Have you ever thought you would be happier if you had a little more, only to find that you were not that much happier when you got there?

In fact, after a certain level, the more money you have, the less effective it is in bringing you happiness. Data in the US shows that as incomes rise from $20,000 to $50,000 (per annum), people’s level of happiness doubled. However, beyond $90,000, increase in happiness becomes negligible.

Dan Gilbert, a psychology professor at Harvard University and the author of Stumbling on Happiness, remarked, “Once you get basic human needs met, a lot more money doesn’t make a lot more happiness.”

So back to the question: What is a reasonable amount of salary for our ministers? What income can buy a person’s basic needs?

In the Singapore context, I would argue that the median income level ought to be a reasonable benchmark for that. And to ensure that our leaders are more than comfortably compensated, let’s multiply it by 4 or 5 times. Would that not be reasonable enough? I believe so, both from a psychological and a practical standpoint.

From a psychological standpoint, ministers should be happy knowing that they are earning quite a few times more than most others in the country. Practically, they would be challenged to work to bring up the median income of the country if they so wish to raise they own salaries.

The current practice of pegging their salaries to two-third of the median of the top earners of the country is unhealthy. Ministers are then inclined to engage in upward comparison, which will make them feel relatively deprived since they will always be at the two-third level and never at the top.