​What Are Tokens In Economics?

Tokens are non-monetary items that give people or entities incentives to make a desired economic decision or exhibit a desired behavior.

A token economy is a system which uses a stimulus or stimuli to reward certain behaviors, and positive systematic reinforcement to strengthen the same or similar behaviors in the future. These reinforcers are symbols or tokens that can be exchanged for other reinforcers. A token economy is based on the principles of operant conditioning where behavior is mainly influenced by the consequences of the behavior such as reward or punishment as well as behavior antecedents, particularly discriminative stimuli. Behavioral economics is another principle used as it studies effects of psychological, social, cognitive, and emotional factors on economic decisions.


Tokens, as applied in economics, were employed in schools and prisons long before the concept of operant learning became widely studies in the world of early 19th Century psychology and sociology. Though these became the precursors for the widely known technique, the system was entirely different because points could be earned and exchanged for many different items and privileges. The concept of the real token economies was seen in 1960 in psychiatric hospitals, and Teodoro Ayllon, Nathan Azrin, and Leonard Krasner were prominent pioneers. It was until 1961 that the very first token economy bearing that name was founded by Ayllon and Azrin at Anna State Hospital in Illinois. In the 1970s the token economies came to a peak and became widespread and 1977 a major study was published and is still considered a landmark till date. The study showed the superiority of a token economy compared to standard treatment and specialized environment therapy.

Relevant Applications of Token Economics

Major research studies have been conducted over the years, and through them it has been realized that the concept of tokens can be applied in various fields, some of which are discussed below. It is applied in the psychological health care for adults where they are offered the choice to enter the token program or not to enter, or to leave again once entered. The vast majority of clients in past studies voluntarily chose to stay in the program. It is also used on clients with Schizophrenia who are resistant to common behavioral treatment approaches as it enables the clients to reach resocialization. It has also been used in acute psychiatric units and was successful in decreasing the aggression on a ward where clients on average stayed for less than twenty-one days.

Praises and Criticisms of the Concept

The principles of token economies help in the motivation of an individual, as it states that clients aren’t expected to do everything perfectly at once since desired, often learned, behaviors can only be acquired in progressive steps. When tokens are awarded, clients are encouraged to exercise self-control, by planning ahead and saving the smaller rewards for a bigger reward in future. Since the token program is a leveled system, clients can progress from one level to another at the highest level. Various criticisms have also arisen that the concept has created resistance among clients due to the expense of its maintenance. It has also been argued that the application of tokens in economics has led to the diminishing of intrinsic motivation which is always out of desire and passion, rather activities have been performed well to attain the outcome you want and tokens rewarded.

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