Monday, 1 February 2010

People respond to incentives ...

really they do.

At Tim Harford asks Does the altruism theory help anyone at all?

He writes,
[...] many policy wonks believe not just that there are some things that money can’t buy, but that cash incentives are counterproductive and even morally corrosive. The touchstone of this school of thought is Richard Titmuss’s book The Gift Relationship, published in 1970.Titmuss’s most memorable and influential claim was that the British system of voluntary blood donation led to better outcomes – healthier blood, supplied in a more timely fashion – than the American system of paying blood donors.
As for blood donation, Titmuss’s thesis is far less pressing now that better blood-screening techniques have been developed. It is not clear how solid the idea was, since he himself complained about the lack of good data. But perhaps he was right that paying for blood was counterproductive.

Still, it is interesting to see a new study by the economists Nicola Lacetera, Mario Macis and Robert Slonim concluding that paying for blood increases the quantity donated without lowering the quality. Distasteful it may be, but sometimes the way to get results is to pay for them.
The study Harford mentions is one I blogged on last December. As I wrote then: "But it has been argued that this is not entirely true [that incentives matter] for some areas of social activity where "intrinsic" motivation is important, such as blood donation. A number of contributions in both the psychology and economics literatures have argued that when people are "intrinsically" motivated to perform a task, as in activities such as blood donation, adding an extrinsic incentive could reduce supply of the activity because the extrinsic incentive might undermine the intrinsic motivation and also attract the "wrong" types of agents to perform the activity. Surveys and laboratory experiments lend support to this non-standard response to economic incentives for the provision of pro-social behaviour. But new research shows that blood donors responding to incentives in the "standard" way; offering donors economic incentives significantly increases turnout and blood units collected, and more so the greater the incentive’s monetary value." So Tim Harford has a point, no matter how distasteful we may find it, sometimes the way to get results is to pay for them. Incentives really do matter.

No comments: