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Does monetary punishment crowd out pro-social motivation? The case of hospital bed-blocking

Tor Helge Holmås (), Egil Kjerstad (), Hilde Lurås () and Odd Rune Straume ()
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Tor Helge Holmås: Health Economics Bergen (HEB), University of Bergen
Egil Kjerstad: Institute for Research in Economics and Business Administration (SNF) and Health Economics Bergen (HEB),
Hilde Lurås: Helse Øst Health Services Research Centre, Akershus University Hospital, Norway.

No 17/2008, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: We study whether the use of explicit monetary incentives might be counter-productive. In particular, we focus on the effect of fining owners of long-term care institutions who prolong length of stay at hospitals. We outline a simple theoretical model, based on motivational crowding theory, deriving the conditions for explicit monetary incentives to have potentially counterproductive effects. In the empirical part, we exploit a natural experiment involving changes in the catchments areas of two large Norwegian hospitals. We find that bed-blocking is reduced when transferring long-term care providers from a hospital using monetary fines to prevent bed-blocking to a hospital not relying on this incentive scheme, and vice versa. We interpret these results as examples of monetary incentives crowding out agents’ intrinsic motivation, leading to a reduction in effort.

Keywords: Motivation crowding; Intrinsic motivation; Monetary punishment; Hospital bed blocking (search for similar items in EconPapers)
JEL-codes: D64 I18 Z13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-exp
Date: 2008
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