Elon's Gift
Or, what happens when you reward outcomes rather than behaviors?
Elon Musk has given us a gift. He’s unintentionally provided us with a large-scale study on how incentives influence behavior. Specifically, he’s dangled a financial reward tied to generating engagement. So far the results are … not great.
I was never a big fan of Twitter, although it did and still has some positive aspects. But when Musk introduced outcome-based incentives (money), it accelerated the enshittification of the site. So I want to explore that. But it requires some preamble.
Musk, as you may know, bought Twitter last year. He took the company private. Now, he needs to drive revenue — but in 2023, Twitter’s advertising revenue declined by 50%. Part of his plan to drive revenue is to incentivize users to create content that will then create more ad impressions. The way to do this, Musk reasons, is to share revenue with the users. But not all users. In order to monetize your Twitter engagement in his new regime, you have to pay to be a Twitter Premium user.
What is Twitter Premium? When Musk took over, he revoked the verified status of users. That’s the little blue checkmark next to account names. This was ostensibly done because Musk and his disciples thought verification was an elitist scam. Instead, he declared, he would open up verification to anyone so long as they paid. He thought this democratized things. But judging by the anemic subscription figures, most viewed Twitter Premium as a shakedown at worst or plain stupid at best.
In the pre-Musk days, I didn’t like Twitter mostly for the same reasons I am still not a fan of most social media: I think it rewards those who are focused on extrinsic rewards, such as status and fame. People (myself included) chase the approval of people we’ve never met in the form of likes and shares and comments. I’m not denying Twitter had some legitimately good and positive uses — it absolutely did, and still does. But it was, and is, a dopamine center that creates addictive feedback loops.
That being said, one thing you could not previously do on Twitter was mone
tize your tweets with ad revenue. And so that brings us to the large-scale study that Musk has given us — his gift. Twitter Premium monetization scheme adds a new extrinsic reward to the mix: Post stuff that gets a lot of engagement and, in addition to that sweet, sweet, dopamine hit, you can actually get paid. Since the launch of Twitter Premium, the platform has been flooded with junk accounts that post low quality reply bait and accounts that just steal reporting from real people without crediting them but reaping the benefits. Other people just post hellaciously false reports.
There’s a host of other issues with Musk’s Twitter as well. Porn bots have overrun the place, prompting Musk to institute a new user fee. There are hundreds of paid accounts openly supporting Nazis. The user experience is much worse now as Musk has let personal grievances influence policy, such as when it appeared links to sites Musk had feuded with loaded slower.
So I think by now you get the gist. In short: Twitter has become a place that monetarily incentivizes virality. Tweets that get a lot of impressions (i.e., they show up in users’ feeds) are not necessarily high quality. They don’t have to be true and they don’t have to be original.
Now here’s the interesting stuff. Rewards affect motivation, and the effects differ depending on a few factors. One major factor is if you are rewarding behavior or if you are rewarding outcomes. As psychologists Richard Ryan and Edward Deci write in “Self Determination Theory,” “research indicates that when outcomes are rewarded (or when failing to reach them is punished), people tend to take the shortest path to the rewarded outcome — that is, they choose those behaviors that are the easiest to do and/or are most likely to yield the requisite outcome.”
I beg you, my loyal reader, to read that about 100 times and think through the implications for a society that assumes the pursuit of profit incentivizes people to create the best goods and services — or post good stuff on Twitter. Why would anyone labor on intensive, high quality journalism when they could post “Who's the best dog? I’ll go first” and generate a hundred million impressions?
A couple examples to illustrate the point in other walks of life, again from Ryan & Deci:
First, in experimental settings in which rewards were offered for each solved puzzle and people were given a choice between which puzzles to work on, they chose easy puzzles, whereas when people were allowed to choose from among the same situations without rewards, they chose the more difficult puzzles (Danner & Lonky, 1981; Shapira 176). Participants take the shortest path to getting rewards, thereby precluding themselves from building competencies through choosing more challenging puzzles.
Long before Elon and Twitter, there was another business that provided solid, real-world scenarios which illustrate this phenomenon: Jeffrey Skillings and his team at Enron, who lied about their earnings to artificially inflate Enron’s share price, thereby enriching themselves. This is why Ryan & Deci have referred to this as the “Enron Effect.’
The phenomenon has been observed in academic settings. Many studies, including this one from 2002, determined that high-stakes testing did not necessarily lead to an increase in scores, but instead a number of unexpected consequences such as “increased drop-out rates, teachers' and schools' cheating on exams, and teachers' defection from the profession…” Even more grim is research that shows that when money is on the table, adults are more likely to cheat period.
The disheartening thing to me is that a large portion of society can’t even really conceive of any other incentive structure. Incentivizing outcomes is so commonplace in our profit-oriented society that people brag on job applications that they are “results oriented.” We applaud this. Strong characters in movies say things like “I don’t care how you do it, just get it done.” We don’t bat an eye at this sort of thing, but we should. It undermines the entire “myth” of Adam Smith’s invisible hand (which is massively misunderstood in its own right, but that’s another story).
These aren’t just abstract ideas restricted to academic research or philosophical texts. I work in news media, and there are choices we make all the time in which we know we are leaving money on the table because over-monetizing will create a worse product. Yes, we think it’s better for us in the long run. It’s not entirely altruistic. But we also have a mission we adhere to to do good journalism and there are ways to make more money that would undermine that mission.
Twitter sucks now, but that is small potatoes compared to what organizing society around profit is doing to health care, journalism, and almost every other industry you can think of. Is it easier for Boeing to make better planes? Or to just make cheaper planes and increase their margins? Why would any company expend more effort to make better stuff if they can increase their margins by raising prices, lowering costs, or even just lobbying to create a more favorable regulatory environment? Is it easier to make better products to increase sales, thereby increasing a company’s share price … or just buy back the shares and increase their price without having to do any R&D? Why use AI to solve a hard problem, like cancer, when you could use it to create customer service chatbots and persuade companies they can make more money by laying off their support staff?
Of course, not everyone will simply give in to their baser instincts. Motivation isn’t binary but exists on a spectrum from intrinsic (doing something that is its own reward) to extrinsic (just doing it for a reward). The problem is, the people focused most on the reward valued by society (in this case profit) have the inside track. This is why Twitter isn’t completely trash but dominated by trash. Something even Musk seems to have noticed.
President Kennedy famously said — in his Kennedy accent — “we choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard.” He didn’t say, “we went to mine rare earth metals and profit.” He said we went “because it’s hard.” I don’t think people understand how insightful this statement really is. Humans are the only known creatures who create puzzles just for the sake of solving them. It’s in our nature to solve problems because we derive pleasure from doing so. We don’t need profit to guide us.