Money cannot buy my motivation!

Population growth and the complexity of societies all over the world is expanding in drastic measures. Correspondingly individual freedom and independent reasoning increase with it. This demands careful governance on social matters is more crucial than ever before. Promotion of social and ethical goals needs to contain well-designed incentives for both the individual and the society.

The motivation for the good deeds is justified by customs, religion or utilitarian motives through the history of mankind. These intertwined concepts guide us today to create incentives. Yet sometimes incentives end up causing unexpected result and even undesired outcomes.

Extrinsic motivations such as monetary rewards are commonly used to remove obstacles against a desired action. However, in contemporary incentives schemes, intrinsic motivations are promoted by many academicians and institutions. In the year 2013, a paper on field experiment had published by Ashraf, Bandiera, and Jack shows that high motivation for a social cause has an impact on the effort. They found out that non-financial incentives and intrinsic motivation have a bigger impact on promoting condom sales in order to prevent HIV. Their argument is supported by different examples of altruistic behaviour and charity.

Researchers designed a field experiment in the capital of Zambia, Lusaka, in collaboration with the local public health organization Society for Family Health (SFH) which recruits hairdressers and barbers to provide information about HIV prevention and to sell female condoms in their shops. The field experiment’s main goal is to implement different incentive schemes on condom sales to compare the effects of monetary and non-monetary rewards.

The experiment contains four different incentive schemes. The first group was recruited as volunteers and received no incentives. This group serves as a control group. Agents in large financial incentive margin treatment received 450 ZMK per pack of condoms sold which is 90% of the retail price for one pack of condoms and agents in small financial incentive margin treatment received 50 ZMK per pack of condoms sold which is 10% of the retail price of one pack of condoms. Also, a haircut in Lusaka costs 3000 ZMK which is relatively high compared to the financial incentives.

 

Control Group

 

 

No Money

Large Financial

 

450 ZMK

 

(90% over retail price)

Small Financial

 

50 ZMK

 

(10% over retail price)

Non-Financial

 

1) Star for each condom pack sold

2) Certificate if  >216 packs sold

The final group receives non-financial rewards and is named star treatment group. This group is provided with a thermometer which is visible in the shop and a star is stamped on it for each condom pack sold. Participants who sold more than 216 packs over a year are awarded a certificate at a ceremony. Furthermore, the experiment includes a placebo star treatment in the control group and two financial treatment groups to capture the effect of the solely visible thermometer. Additionally, the effect of intrinsic motivation is controlled on the group level. This treatment distributes identical star thermometers to randomly selected saloons which show the average sales of all saloons. This setup aims to show the impact of visual material without intrinsic motivation.

Results show two outcomes which prove that intrinsic motivation is more effective than financial incentives in the prosocial task. First, agents in the star treatment group sold 7.48 more packs than the other treatment groups. Second, agents who donated more than the median amount to the HIV charity sold 3.35 more packs. These outcomes show promising results regarding the relationship between intrinsic motivation and prosocial task, but closer look needs to be taken at the other treatments for better comparison. The Placebo star treatment also has a very little effect on sales.

The main finding concerning financial incentives is that both forms of financial treatment did not affect the sales. Their coefficient is very small compared to star treatment. The outcome shows that monetary compensation on performance was not monotonic which indicates that high payment does not always produce an improvement in performance. The failure of financial incentives might be caused by the relatively low margin compared to the cost of a haircut (about 3000 ZMK) and the hairdressers’ profit is insufficient per condom pack sold. Therefore, stylists might not find the compensation worthy enough to promote the material.

In conclusion, a problem such as the spread of HIV has an impact on society on multiple levels. HIV is a serious health condition and also has an impact on the society. Health and safety are prominent obstacles to the development of a country. Therefore, the distribution of information and material about the prevention of this decrease via hairdressers shows a good incentive design. Ultimately we can say that sometimes people are more interested in public goals even without monetary incentives to their advantage.

 

References:

Nava Ashraf, Oriana Bandiera, B. Kelsey Jack (2014). No margin, no mission? A field experiment on incentives for public service delivery. Journal of Public Economics, Volume 120, Pages 1-17.

Roland Bénabou, Jean Tirole (2006). Incentives and Prosocial Behavior. American Economic Review Volume 96, No 5., Pages 1652-1678.

Roland Bénabou, Jean Tirole (2003). Intrinsic and Extrinsic Motivation. The Review of Economic Studies, Volume 70, Issue 3, Pages 489-520.

United Nations (2016). Zambia Human Development Report, United Nations Development Programme (UNDP), Page 60.

 

United Nations (2015). Human Development Report (UNDP) Sales no.: E.15.III.B.1 ISBN: 978-92-1-126398-5 ISBN: 978-92-1-057615-4 ISSN: 0969-4501, Page 121.

Uri Gneezy, Aldo Rustichini (2000). Pay Enough or Don’t Pay at All. The Quarterly Journal of Economics, Volume 115, Issue 3, 1 August 2000, Pages 791–810.

Edward P. Lazear (2000). Performance Pay and Productivity. The American Economic Review Volume 90, No. 5, Pages 1346-1361.

 

 

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