Special Section: Doing Psychological Science Giving and Receiving Awards

Awards in the form of orders, medals, decorations, prizes, and titles are ubiquitous in monarchies and republics, private organizations, and not-for-profit and profit-oriented firms. Nevertheless, this kind of nonmaterial extrinsic incentive has been given little attention in the social sciences, including psychology. The demand for awards relies on an individual’s desire for distinction, and the supply of awards is governed by the desire to motivate. The technique of analytic narratives is used to show that a number of empirically testable propositions about awards are consistent with observable data. If an alien were to look at the social life of people here on earth, it would be stunned by the enormous number of awards in the form of orders, medals, decorations, prizes, titles, and other honors. It would be hard pressed to find any area of society in which awards are not used. Awards are as ubiquitous in monarchies as in staunch republics (a probably incomplete list of types of official awards can be found in Wikipedia’s ‘‘List of Prizes, Medals, and Awards,’’ 2006; see also Robertson, 2005, and House of Commons, 2004). In the United States, the president and Congress bestow medals (the Congressional Gold Medal, created in 1776; the Presidential Medal of Freedom, created in 1945; and the Presidential Citizens Medal, created in 1969). At the same time, there are a very large number of awards in the military sector. Best known are the Purple Heart, Bronze Star, and Silver Star, which are handed out quite liberally and at an increasing rate (Cowen, 2000). It is well known that a flood of orders, medals, and titles (e.g., ‘‘Hero of the Soviet Union,’’ ‘‘Hero of Socialist Labor’’) was handed out in former communist countries, such as the Soviet Union and the German Democratic Republic, and that it is typical for both rightand left-wing dictatorships to hand awards out frequently. Not only governments bestow awards. In the arts, culture, sports, and the media, awards are also of central importance. A few prominent examples are the Academy Awards (Oscars); the prizes handed out by the film festivals at Cannes, Venice, and Berlin (see, e.g., Simonton 2004); the Emmy awards for outstanding achievement in television in the United States; the Grammy awards for artistic significance in the field of recording; the Queen Elisabeth International Piano Competition prize in Brussels; the Booker prize and the prix Goncourt in literature; and the Pulitzer prize (awarded in nine categories: novel, history, fiction, poetry, nonfiction, criticism, telegraphic reporting, breaking-news photography, and reporting). Arts institutions, such as museums, bestow titles, such as benefactor or patron (see, e.g., Ginsburgh & van Ours, 2003; Holden, 1993; Levy, 1987; and R.A. Nelson, Donihue, Waldman, & Wheaton, 2001), upon their supporters. In the field of sports, there are yearly competitions for the title of World Champion, and Olympic Champions are crowned every 4 years. In chess, there are International Masters and Grand Masters. Athletes may become ‘‘Sports Personality of the Year’’ and be admitted into one of the many Halls of Fame. Religious organizations such as the Catholic Church award the titles Canon or Monsignore, and beatify and canonize distinguished persons, an outcome that can be considered a post mortem award. One might expect that academia, as a place of rational interaction, represents an exception. The opposite is true: Academia has an elaborate and extensive system of awards. Consider all the universities that hand out honorary titles of doctor or senator, or the professional associations that award an enormous number of medals, the most important one probably being the Fields Medal in mathematics. And then, of course, there are the Nobel prizes. Many prestigious fellowships exist in academies of science (e.g., Fellow of the Royal Society, founded in 1660; Fellow of the American Academy of Arts and Sciences, founded in 1780; Fellow of the Royal Society of Edinburgh, founded, among others, by Adam Smith in 1783; and Fellow of the Academy of Social Sciences in Australia). There are also honorary fellowships in professional organizations, such as those for psychiatrists (Roberts, Warner, Horwitz, McCarty, & Roberts, 1999). Moreover, there is a complicated system of academic titles (not always connected to functions), such as lecturer, Address correspondence to Bruno S. Frey, Department of Economics, University of Zurich, Zurich, Switzerland, e-mail: bsfrey@iew. unizh.ch. There are at least 10 other major prizes in British literature, and 5 in French literature (e.g., the Prix Fémina, Prix Médicis, and Grand Prix du Roman de l’Académie Francaise). In fact, there are at least 15 other important prizes in mathematics (‘‘List of Prizes, Medals, and Awards,’’ 2006). PERSPECTIVES ON PSYCHOLOGICAL SCIENCE Volume 1—Number 4 377 Copyright r 2006 Association for Psychological Science reader, assistant professor, associate professor (with or without tenure), full professor, named professor, university professor, and distinguished professor. And then there is the flood of bestpaper awards handed out at conferences and by journals (Coupé, 2003). Within psychology, many societies give awards for the best posters and conferences and for the best articles published each year in specific journals. Furthermore, major societies, such as the American Psychological Association and the Association for Psychological Science, give a number of awards for research eminence, teaching, and other scholarly and applied activities. An alien looking at earth might well find that academia is one of the places with the most awards. Most surprising is the widespread use of awards in the corporate sector of a market economy, where the only valid reward, after all, is supposed to be money. But titles are important and are often little related to functions. What manager is not, at the very least, a vice president or, even better, a senior vice president or first senior vice president (Bielby & Baron, 1986; Malmendier & Tate, 2005)? Firms also commend their own employees for being ‘‘Salesperson of the Month’’ or ‘‘Employee of the Week.’’ Many corporations use formal recognition programs and bestow titles such as ‘‘Superstar’’ as a way of giving approval and acknowledgment to their most valued employees (see, e.g., Magnus, 1981; B. Nelson, 2005). There seems to be no limit to inventing new awards in the corporate sector. The media support this activity by regularly choosing a ‘‘Manager of the Month,’’ ‘‘Manager of the Year,’’ or even ‘‘Manager of the Century.’’ Organizations, such as the World Economic Forum, appoint people to the position of ‘‘Global Leader of Tomorrow’’ (1,200 persons) and ‘‘Young Global Leader’’ (1,111 persons below 40 years of age). Despite the importance of awards in society, academic research (outside history) has largely disregarded them. There may be various reasons for this neglect. First, awards may be considered to be relatively ineffective as a motivational device, because they are not fungible and are difficult to apply marginally. Monetary compensation is therefore considered a superior instrument for inducing effort (Baker, Jensen, & Murphy, 1988). Second, awards may simply be a reflection of success and high monetary incomes. Third, awards as such may be taken to be of no interest to recipients. After all, they cannot be consumed. The only things of value to individuals may be taken to be the ancillary income and the increase in future income induced by receipt of an award. There is certainly some truth in this. It has been empirically shown, for instance, that the recipients of Oscars enjoy a huge increase in subsequent income (R.A. Nelson et al., 2001). But recipients of the Nobel prize certainly value the prize over and above the accompanying or subsequent monetary reward. Psychologists have shown experimentally (Huberman, Loch, & Öncüler 2004) that people value status independently of the monetary consequence; they are even willing to incur material costs to obtain high status. As awards are one of the most important producers of status, it follows that people attach value to awards. Conversely, some prizes, medals, and awards that are accompanied by large sums of money are nevertheless relatively unknown and have no prestige even within the relevant community. There are major differences between awards and monetary compensation, making it worthwhile to analyze awards separately. At this point, it suffices to mention the following differences: The material costs of awards may be very low, or even nil, for the donor. Awards consist of a worthless piece of ribbon or medal, but the value to the recipients may be very high when awards signal high social status. Accepting an award establishes a special relationship in which one owes (some measure of) loyalty to the donor. The contract is psychological (see Rousseau & Parks, 1993; Rousseau, 1995; and a large subsequent literature); it is tacit, incomplete, and difficult, or impossible, to enforce by the donor. Monetary compensation, in contrast, is explicit, precise, and easy to enforce through the courts. Awards are a better incentive instrument than a monetary payment when the recipient’s performance can be only vaguely determined, as is typically the case. Performance can be determined precisely only in the case of simple tasks (Frey & Osterloh, 2002). Awards are less likely than monetary payments to be subject to the ‘‘hidden costs of rewards’’ (Lepper & Greene, 1978). Awards may be the only option available for rewarding exceptional performance when firms are restricted to pay the same wage to all workers at a particular job level (e.g., because of collective bargaining agreements; Clark & Riis, 1998). Awards are not taxed, whereas monetary income is. Unlike monetary compensation, awards characteristically can be only vaguely defined. There is, for example, no clear distinction between orders, decorations, and medals, and they can come with or without titles and money. These unclear distinctions are not an accident, but an important feature of awards. They make an analysis difficult because the qualitative aspect is Another benefit from receiving awards may be improved health. It has been calculated that, on average, actors who receive an Oscar live 4 years longer than actors who do not get this award (see Redelmeier & Singh, 2001). A pertinent example is a prize awarded to eminent scholars since 1961 by the Italian and Swiss presidents. The recipient receives 1 million Swiss francs (U.S. $770,000), but few people know about this award or attribute any prestige to it. It is called the Balzan prize. For a list of other such prizes, see ‘‘List of Orders, Medals, and Awards’’ (2006). The word order itself has several different meanings: a mathematical sequence, a command, a religious community, or an award. The last two meanings are connected historically. Knights with orders of chivalry (e.g., the Order of the Holy Sepulchre, founded in 1099; the Templars, founded in 1118; the Order of St. John, founded in 1118; and the Teutonic Order, founded in 1170) wore insignia. Over time, such insignia gained a life of their own, independent of membership to an organization. 378 Volume 1—Number 4 Giving and Receiving Awards