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The link between Hope, Mental Well-Being and Economic Productivity


Economic productivity is usually related to capital, infrastructure, resources and technology. Factors such as hope, motivation and mental well-being are given a backseat. What people don’t see is the gradual loss of productivity due to depression, anxiety, stress and social insecurity. Economic productivity is directly linked to mental well-being. Workers would be able to contribute more to the workforce if they are healthy, happy and hopeful. Using several studies hypothesizing the role of hope and mental well being in the productivity of the labor force, this article concludes a positive relationship between the two concepts.

The Experiment

Abhijeet Banerjee, in his talk on Good Economics, Poor Economics, highlights the role that hope can play in directly increasing productivity. A study was conducted by Banerjee in a bag factory in Mirzapur, UP. It was a 3-month long experiment aimed at measuring the effect of gifts and tokens of appreciation for factory workers on productivity. Over the duration of the experiment, it was observed that if we increase the gift, even by small amounts like $2 per week, it increases productivity by 25%. This experiment highlights the introduction of emotions and psycho-social well-being of workers and directly correlates it to their economic efficiency. This, in turn, helps in increasing their per capita income and contributes towards breaking the vicious cycle.

Poverty and Mental Health

Esther Duflo’s Tanner Lecture on 12th May 2012 delves deeper into the question of ‘Whether a deficit of hope can be the source of a poverty trap, and, conversely, whether hope can fuel an exit from the poverty trap.’ Apart from food, there are multiple sources of the poverty trap. One of them is mental health. In a research study done in the underdeveloped regions of West Bengal with people engaged in menial jobs like manual labor, sanitation workers, etc, it was observed that many people showed symptoms of stress, depression and anxiety. But after 18 months, the beneficiaries of certain schemes and initiatives were much less likely to report the symptoms than non-beneficiaries. They felt that their health had improved (although we do not see improvement in the measure of actual physical health), and their life satisfaction increased. The research hypothesized that this improved mental health is what gave participants the energy to work, save and invest more. This difference between an actual increase in health and happiness and the perceived increase of the same reduces morbidity and promotes efficiency and productivity. We could use this phenomenon of hope, not only in the secondary sector but also in the tertiary sector by acknowledging, incentivising and rewarding good work.

Maslow's Need Hierarchy Theory

Belongingness forms the third level of Maslow’s Need Hierarchy Theory. It implies that unless a sense of personal security, belongingness and inclusion is fulfilled, one cannot be motivated by superior incentives. Fulfillment of needs is necessary since it directly relates to one’s efficiency and effectiveness. If this fulfillment is achieved, it would lead to less stress and anxiety, thus encouraging mental health and well-being. Stress and a sense of insecurity can have negative impacts not only on the worker themselves but also on their environment and other workers

whom they interact with. Further, it is indirectly proportional to productivity, implying that a mentally unhealthy and unsatisfied worker would be relatively less productive than others.

Incentives in Secondary and Tertiary sectors

As quoted by JPAL, “Optimism and hope can make all the difference. Hope can be as simple as knowing that one will be able to buy the TV that one has been looking for.” Workers need psychological assurance in order to be more productive and the best way to provide this assurance is through giving them a sense of belonging and hope. In addition to using gifts as incentives, organizations also use them for retaining workers. Diamond manufacturing centres in Surat are often short of skilled laborers. The demand for these specialized workers is high and supply is very low; thus in order to retain them, owners often give extravagant bonuses and gifts to their employees. This creates a sense of belonging and loyalty amongst the workers and reduces their chances of quitting their job for a small variation in salary and working conditions offered by competitors. In the tertiary sector, Employee Stock Option Plans (ESOP) is the best example. Under this plan, employers offer their employees the stock of the company at a low or no additional cost that they can encash after a specified period at a specific price. The sense of ownership provides a sense of security and acts as a tool of motivation for the employees: they personally feel invested in the company’s progress and responsible for its performance. Secondly, it helps the employer to retain the company and assure a good level of performance in the work.

Busting the myth of laziness

Although hope and incentives can be used as a tool for increasing economic productivity, we see a lot of instances where the opposite of this happens. Freebies can be termed as a medium for generating hope amongst the targeted audience, but government freebies and subsidies are often critiqued as being a waste of taxpayers’ money. A popular notion is that too much soft padding of workers would encourage a sense of fatigue and laziness which reduces their incentive to work harder and works inversely to the concept of productivity. This is the by-product of corruption and wrong targeting. It should be noted that incentives motivate the workers to contribute more. Ex-Chief Justice of India, NV Ramana highlighted that people are not looking for freebies. Given the opportunity, they will look for dignified earnings.


In the course of employment, bonuses, incentives and tokens of appreciation can initiate a virtuous cycle. The employers would acknowledge and reward good work, which would give employees hope and motivation to work harder. This would increase productivity and simultaneously grow revenues. A part of increased revenues can be used for bonuses and salary hikes, which further strengthens the virtuous cycle. If the workers feel that they are cared for, they will work harder in order to maintain that trust. Moreover, it would help in promoting mental peace and well-being in their workspace.

(Written by Kuhuo Bajaj and Edited by Ananya Agarwal)

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