When and Why Incentives (Don't) Work to Modify Behavior

Uri Gneezy, Stephan Meier and Pedro Rey-Biel

Journal of Economic Perspectives, 2011, vol. 25, issue 4, 191-210

Abstract: First we discuss how extrinsic incentives may come into conflict with other motivations. For example, monetary incentives from principals may change how tasks are perceived by agents, with negative effects on behavior. In other cases, incentives might have the desired effects in the short term, but they still weaken intrinsic motivations. To put it in concrete terms, an incentive for a child to learn to read might achieve that goal in the short term, but then be counterproductive as an incentive for students to enjoy reading and seek it out over their lifetimes. Next we examine the research literature on three important examples in which monetary incentives have been used in a nonemployment context to foster the desired behavior: education; increasing contributions to public goods; and helping people change their lifestyles, particularly with regard to smoking and exercise. The conclusion sums up some lessons on when extrinsic incentives are more or less likely to alter such behaviors in the desired directions.

JEL-codes: D12 D82 H41 I18 I20 (search for similar items in EconPapers)
Date: 2011
Note: DOI: 10.1257/jep.25.4.191
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Citations: View citations in EconPapers (623)

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