[Kwerks - #4] People prefer to receive a thankyou mail over a cash reward

Learn about the differences between social and economic norms

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What are social and economic norms?

Standard economics suggests that people work in 2 different worlds, one where social norms dominate and the other where market norms dominate. The real issue occurs when people try to mix these both in a situation. 

For example, we will be happy to help our friend to move a bed, but we will find it rude if he tries to pay for it.

Recommendation:

It is advisable to not offer any monetary award than giving a small one.

Effect:

Companies usually provide a small cash reward to their customers as gratitude for the support or help offered.

When this gratitude is being shared appropriately, the customers will be interested in having a good relationship with the company. But when a monetary reward is introduced, they immediately start to think about it in economic norms.

How it Works?

The deals we have among friends and relatives are not motivated by pure economical considerations. The NGOs are guided not by the wages but by social norms and the knowledge that they are helping people. It would be difficult to get police officers, fire-fighters or soldiers to risk their lives simply for money. Only few teachers or nurses will put in the long hours on the job if you appeal to their market norms. But when you take the social norm approach, they will be willing to do it. Contrary to what standard economics tells you, we are not solely motivated by money.

Recommendation:

Take any one approach, either market or social norm. Do not try to mix both, or it will have negative effects on the customer, employees, and friends.