Many companies try to use incentive systems to increase the motivation and effectiveness of their employees. These systems often resemble competitions: for example, whoever has the highest sales figures at the end of the month receives a bonus.

Such competitions can certainly increase productivity. But they also have a downside: scientific studies have shown that they can, for example, worsen cooperation between colleagues in the short term.

But what happens in the long term to people who are exposed to such competitive pressure over a longer period of time? Do they get used to the competitive pressure, or does it even change their personality?

A team led by Professor Fabian Kosse from Julius-Maximilians-Universität (JMU) in Würzburg has now investigated these very questions for the first time: ‘We studied how a prolonged competitive environment influences the prosocial behaviour of young people, i.e. their willingness to help and their mutual trust,’ says Kosse, who heads the JMU Chair of Data Science in Business and Economics.

Helpfulness and Trust Decline

The results of the study give pause for thought: two years of intense competition significantly reduce helpfulness and trust among young people. And not just in the short term – even four years after the end of the competition, the effects are still there. ‘So prolonged competition not only changes situational behaviour. It also influences personality development,’ says Kosse.

The study was conducted in collaboration with Ranjita Rajan from the Karta Initiative (Oxford) and Michela Tincani from University College London. It has been published in the renowned Journal of the European Economic Association.

How the Results Were Obtained

The researchers conducted a large-scale field study at schools in Chile. According to Fabian Kosse, the quantity and quality of the available educational data there is very good.

For the study, the scientists used a programme introduced by the Chilean government (PACE). It was implemented at selected high schools to bring more young people from socially disadvantaged families to universities.

The programme guarantees a place at university for the top 15 percent of students in each school. Those who belong to this group no longer have to take the otherwise mandatory central entrance exam for universities. This is very important for young people from socially disadvantaged families, as very few of them make it to university through the regular, centralised admission system.

The incentive to be among the top 15 percent is therefore strong. However, the long-term competition that the programme sparks in schools is also strong: it is a competition that lasts two years, because who is among the best is not decided by a single final exam, but by all their performance over the last school years.

Against this background, the researchers were active at 64 PACE schools and 64 control schools where the PACE programme is not in place. A total of more than 5,000 students were involved. Crucial to the validity of the results was the fact that the schools participating in the PACE programme and those serving as control schools were selected at random – in other words, it was a genuine experiment with treatment and control groups.

For their study, the researchers evaluated data collected by the Chilean government to evaluate the PACE programme. They also conducted detailed surveys of students, teachers and school administrators that they developed themselves.
The questions concerned the school atmosphere and included, for example, ‘How much do you agree with the following statement: There is a lot of competition for the best grades in my class.’ Above all, the questions focused on prosocial behaviour such as altruism, reciprocity and trust (‘How willing are you to help others without expecting anything in return?’).

What can be Done to Counteract the Negative Consequences?

In its publication, the team proposes measures that could potentially prevent or reduce the prosociality reducing consequences of PACE and similar competition-based incentive systems.

Change the rules of the competition: It might help to determine the ranking of the best students not within a specific school, but within the group of all socially disadvantaged students in a specific region of the country. In such a system, the internal competitive pressure within the school would be lower.

Creating cooperation instead of competition: If the competition takes place across schools, the resulting mindset of ‘us together against the other schools’ could improve cooperation and atmosphere and even increase prosociality.