03 Jan 2022 psychology

One of the biggest factors determining the efficacy of therapy is the quality of the therapeutic relationship. It seems that how you feel about your therapist is just as important, if not more important, than the particular type of therapy you receive.

This makes some intuitive sense. In order to get value from therapy, you typically have to attend sessions over an extended period of time, share your innermost thoughts and feelings with your therapist, and follow any exercises or advice they might give you. All of these things are unlikely to happen if you don't actually like or trust your therapist.

But one thing that might undermine your positive feelings towards your therapist is the fact that you're paying them for their services. Money inevitably affects the nature of relationships, and it may spark thoughts like:

• if my therapist really cared about me, they wouldn't charge me to see them.
• it's in my therapist's financial interests to keep me as their patient for as long as possible, so are they really doing all they can to help me?
• my therapist is charging me £X / hour - are they really worth it or should I see a cheaper therapist?

Unfortunately, once you've entertained these kind of thoughts, it's hard to dismiss them wholeheartedly.

And it's not just patients' feelings that are affected by money. Many therapists experience anxiety, or even guilt, over charging a fee. The idea of refusing to help people in need because they're too poor to afford a fee makes many therapists deeply uncomfortable.

All of this raises 2 questions: if a therapist is paid by someone other than the patient, does this allow for a better therapeutic relationship? And if so, does this mean that therapy is more likely to be effective when the patient is not directly paying the therapist for their services?

It might seem unlikely that the structural issue of how therapists are paid would have much bearing on therapeutic outcomes. But given the importance of the therapeutic relationship, I would have thought it's worth exploring whether eliminating tensions relating to money could improve outcomes.

My instinct is that to see any effect, there would need to be a total disconnect between the therapist getting paid and the patient receiving therapy. If a person's therapist were being paid by a friend or family member, for instance, the tensions around money would likely remain. Therefore, to see any benefits, I imagine you would need to eliminate the transactional element of therapy. In other words, the therapist's payment should not be directly tied to seeing any particular patient. The obvious way to achieve this would be to have therapists paid a salary by the state or a charity (the other benefits of which would clearly far outweigh anything being discussed here).

We might be tempted to look for answers to these questions by comparing therapeutic outcomes between patients receiving therapy on the NHS and those paying privately. Unfortunately this isn't a good comparison because the NHS has such long waiting times (6-12 months) and offers such short treatment courses (typically one block of 6 or 12 sessions) compared to the private sector. But if we could control for these factors and just vary the party paying the therapist, I would be interested to see if this had any bearing on therapeutic outcomes.

09 Oct 2021 equity psychology

In the world of startups, there's a commonly held view that equity is an important mechanism for aligning the interests of individuals with those of the company they work for. If you work hard, the company will become more valuable, and so too will your shares in that company. Therefore, giving shares (or at least stock options) to employees should motivate them to work harder for that company.

But as we all know by now, people are not ideal rational actors who work only to maximise their self-interest. There are other factors that drive us, sometimes to our own detriment. One such factor is how we feel about other people: if you like someone, you're more inclined to help them; if you don't like them, you're more inclined to hurt them. And if you really don't like someone, you may be prepared to hurt them even if doing so also hurts yourself.

Consider now this scenario: an employee owns 0.1% of a company, a founder owns 10%. If the value of the company goes up from £1 million to £10 million, the value of the employee's shares will rise from £1,000 to £10,000, and the value of the founder's shares will rise from £100,000 to £1,000,000. A rational employee may be motivated to work hard by the prospect of increasing the value of their own shares. But if the employee dislikes the founder, they may also feel motivated to suppress the value of the founder's shares. These two motivations are in conflict, but it's not implausible that the latter would win out. Sure, the employee would be missing out on £9,000, but the founder would be missing out on £900,000, and that's gotta hurt!

Even if the employee actually quite likes the founder, they might feel that it's unfair that their work will contribute to the founder becoming £900,000 richer whilst they only become £9,000 better off. This feeling of unfairness may well be sufficient to motivate the employee to slack off and forego their own potential gain (just as people reject "unfair" offers in the ultimatum game).

Does this kind of phenomenon have any impact on the performance of real-world startups? I don't know, but I'd be interested to find out. Employee motivation is a hot topic and it's not obvious to me that typical employee stock options provide effective incentives.

Related links #

• Herbert Gintis on Game Theory. He goes so far as to as to describe vengeance or retribution as "one of the basic human behaviours", arguing that is was essential in the development of cooperative societies.
• Handcuffed to Uber. Perhaps evidence that employee stock options are effective? Though I'm taking this with a large pinch of salt. This article was written in 2016, Travis Kalanick left 2017. You do the math.

Despite employees’ immobility, morale inside Uber remains high, according to our sources, a sentiment that the jobs site Glassdoor seems to confirm. Roughly 1,600 people have reviewed Uber on the platform; the 490 who’ve rated CEO Travis Kalanick collectively award him a 91 percent approval rating.