testing the effect of pro-social and financial incentives
DESCRIPTION
Alex Imas (Carnegie Mellon University) shares findings from research on the effects of pro-social incentivesTRANSCRIPT
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PROSOCIAL INCENTIVES
Alex ImasCarnegie Mellon University
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Motivation
People are happier spending on others than themselves (Dunn, Aknin and Norton, 2008; Norton et al. 2012)
Test effectiveness of prosocial incentives
Charity partners with firm, both potentially benefit
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Weight Loss
Or
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Prosocial Behavior
Theory of warm glow (Andreoni, 1989; 1995)
Individuals incentive to scope in the social domain (Hsee
and Rottenstreich, 2004; Small, Loewenstein and Slovik, 2007)
Sensitive to scope under standard incentives (Gneezy, Meier and Rey-Biel, 2011)
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Aim
Prosocial incentives motivate better than standard incentives, to a point
Prosocial incentives not sensitive to outcome, standard incentives are
Scope and choice
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Experiment 1: Effort
UCSD students (N=187) recruited. All received $5 show up fee
Subjects squeezed hand dynamometer at 60 second intervals
Output measured in Newtons. Effort taken to be total force exerted over 60 second interval.
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Experiment 1: Effort Effort measured in two stages: the calibration and treatment
stage.
First asked to squeeze for 60 seconds to calibrate sensor. This was baseline. Treatment stage divided by baseline to create normalized measure of effort R that controls for individual characteristics.
Subjects then randomly placed into one of five treatments (Low = $0.05 per 25,000 N; High = $2.00 per 25,000 N):
Low and High For Self Low and High For Others Control
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Experiment 1: Predictions
H1: In Low treatments, more effort will be exerted under For Others incentive scheme than in For Self incentive scheme
H2: Effort should not change in For Others incentive scheme when incentives go from Low to High
H3: In High treatments, the same or less amount of effort will be provided under For Others incentive scheme than in For Self incentive scheme
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Experiment 1: ResultsEffort Ratio by Treatment
Low Incentive High Incentive1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
For Others
For SelfEff
ort
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Experiment 1: Results
Effort higher For Others than For Self under low incentives
No longer true when incentives are high
Under For Self, effort increased going from low to high
Under For Others, effort did not change going from low to high
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Experiment 2: Choice Do people select into prosocial incentive schemes?
UCSD students (N=57) recruited. All received $5 show up fee
Same setup as Experiment 1
Participants matched into either Low or High Incentive condition
Asked to choose Incentive scheme (For Others or For Self)
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Experiment 2: ResultsChoice of Incentive Scheme
Low Incentive High Incentive0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
77%
15%
23%
85%
For Others
For Self
Cho
ice
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Experiment 2: Results
At Low incentives, 77% (23) chose to work For Others and 23% (7) chose to work For Self
At High incentives, 15% (4) chose to work For Others and 85% (23) chose to work For Self (p<.001)
General pattern of effort same as in Experiment 1
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Implications
Prosocial incentives superior to standard incentives—at low stakes
Insensitive to size of prosocial incentive
Choice was consistent with behavior
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Implications
Direct monetary compensation may not be optimal scheme in some situations.
Creates potential positive externalities such as more satisfied workforce and improved company image (Folkes and Kamins, 1999, Norton et al. 2012)
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Prosocial incentives in the field Individuals avoid prosocial situations (Andreoni, Rao &
Trachtman, 2012; DellaVigna, List, & Malmendier, 2012)
Will individuals avoid opting in to prosocial incentives if given the opportunity?
Signaling - giving may be motivated by desire to appear prosocial to self and others (Ariely, Bracha, & Meier, 2009; Benabou & Tirole, 2006)
Does making behavior public enhance the effect of prosocial incentives?
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Experiment 3: Opting In to Recycle Individuals (N = 846) invited to participate in a recycling
drive (12 classrooms)
Incentive: $0.05 For Self or For Others (Make-A-Wish Foundation)
Setting: Public vs. Private
Classrooms randomly assigned to one of 5 treatments: Prosocial Private and Public Selfish Private and Public Control (no incentive)
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Predictions Participants will be more likely to opt in to recycling For
Others
This effect will be greater in public
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Results: Opting in to recycle
Private Public0
0.05
0.1
0.15
0.2
0.25
0.3
ProsocialSelfish
Opt
in lik
elihood
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Results
Main effect of the Prosocial incentive scheme: 19.1% of students opt in For Others vs. 7.4% For Self, p < .01
Significantly more sign-ups in Public and Private For Others (23.9% and 15.1%, respectively) compared to Public and Private For Self (6.79% and 8.09%, respectively), p < .05
Making participation Public had an effect on sign ups only in the Prosocial treatment: 23.9% in For Others vs. 15.1% in Private, p < .05
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Experiment 4: Online Labor Spot-Market
Incentivize workers from Amazon Mechanical Turk’s spot-market
Task: Collect images of wildlife for a database
Bonus Incentive: Low/$0.01 per 10 images vs. High/$0.10 per 10 images
Beneficiary: For Self vs. For Others (i.e., for charity)
How many worked opt in to the incentive scheme by finishing the task?
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Results: Opting in to bonus incentive
Low High0.45
0.5
0.55
0.6
0.65
0.7
For OthersFor Self
Opt
in lik
elihood
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Conclusion Individuals do not seem to avoid prosocial incentives but
rather are more likely to opt in to a task compared to those presented with a standard incentive scheme
Individuals were significantly more likely to participate in the recycling drive when money from recyclables went to charity rather than themselves.
Evidences suggests that making the behavior public may enhance the effect of prosocial incentives
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DYNAMICS IN PROSOCIAL BEHAVIOR
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Dynamics of prosocial behavior
Important to understand how people make moral choices over time
Does a moral choice make subsequent prosocial behavior more or less likely?
Important for timing of solicitations
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Moral licensing vs. Moral consistency
Robust evidence for both effects
Challenge to find which effect dominates in real-world situations
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In the lab
Manipulated the cost of initial prosocial behavior played game in which they choose whether to lie
• Cost manipulation (Senders)
• Costly Donation: $2 will be taken from their compensation and be donated to Make-A-Wish Foundation
• Costless Donation: A $2 donation to Make-A-Wish Foundation will be made on their behalf, independent of compensation
• Control: No donation
• Next, participants played the Sender-Receiver game (Gneezy
2005)
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Experiment 1 – Truthfulness
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In the field
• Field experiment at a large amusement park (N = 363)
• Guests’ photos taken during a ride – can be purchased at the
exit from the ride
• Could purchase additional merchandise in store
• Experimental treatments:
• Non-prosocial - Buy photo at fixed price ($12.95)
• Prosocial - Buy photo at fixed Price ($12.95) + half to charity
• DV: fraction of guests buying additional merchandise for Self
vs. Other (conditional on buying a photo)
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Results
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Strategy
• Does informing individuals about prosocial opportunities
change ethical behavior?
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Informed Incentive Baseline Informed Bundle0
10
20
30
40
50
60
70
Deception Rates
Information increased lying
p = .02 p = .02
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Conclusion
• An initial costly prosocial behavior produces Moral
Consistency (vs. Moral Licensing)
• An initial costless prosocial behavior produces Moral
Licensing
• Change in behavior is due to a shift in one’s prosocial
identity when initial prosocial act is costly
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Thank you!