Non-Financial Incentives
Brandon Williams
Development Economics
October 1, 2024
Non-Financial Incentives
Development Economics
October 1, 2024
Making Moves Matter (2019)
- Not all incentives are financial, and in governments, there may be limited finances available
- Another way to incentivize performance is through strategic transfers to good posts for bureaucrats
- Randomize tax collectors in Pakistan
- Performance ranked serial dictatorship (PRSD)
- Control
- 41% (year 1) and 30% (year 2) increase in tax revenues, nearly equivalent to a direct financial incentive design, but at no cost to the government
- Model predicts some have stronger incentives, and indeed they do
- Diminishing results over time? May be that some learn how the system works and can reduce their effort
Non-Financial Incentives
Development Economics
October 1, 2024
Making Moves Matter (2019)
The Model:
y_i = y_{i0} + e_i + \epsilon_i
}
}
}
effort
growth of tax with no effort
tax growth
Outcome:
Non-Financial Incentives
Development Economics
October 1, 2024
Making Moves Matter (2019)
The Model:
y_i = y_{i0} + e_i + \epsilon_i
Outcome:
\max_{e_i} \sum^J_{j=1} \underbrace{u_{ij} \Pr} ( j = r_i(y_i, \mathbf{y}_{-i}, \mathbf{P}))-c(e_i)
Inspector choice:
Utility
Assignment function
Preferences
}
Non-Financial Incentives
Development Economics
October 1, 2024
Making Moves Matter (2019)
The Model:
y_i = y_{i0} + e_i + \epsilon_i
Outcome:
\max_{e_i} \sum^J_{j=1} u_{ij} \Pr ( j = r_i(y_i, \mathbf{y}_{-i}, \mathbf{P}))-c(e_i)
Inspector choice:
FOC and equil.:
\underbrace{\frac{d E[u]}{de_i}} = \sum^J_{j=1} u_{ij} \frac{ \partial \Pr ( j = r_i(y_i, \mathbf{y}_{-i}, \mathbf{P}))}{\partial y_i} = c'(e_i)
Marginal return to effort
Non-Financial Incentives
Development Economics
October 1, 2024
Making Moves Matter (2019)
The Model:
\frac{d E[u]}{de_i} = \sum^J_{j=1} u_{ij} \frac{ \partial \Pr ( j = r_i(y_i, \mathbf{y}_{-i}, \mathbf{P}))}{\partial y_i} = c'(e_i)
Everyone knows everything,
creates substantial heterogeneity
Less knowledge
moves it right
Non-Financial Incentives
Development Economics
October 1, 2024
Making Moves Matter (2019)
The Model:
\frac{d E[u]}{de_i} = \sum^J_{j=1} u_{ij} \frac{ \partial \Pr ( j = r_i(y_i, \mathbf{y}_{-i}, \mathbf{P}))}{\partial y_i} = c'(e_i)
Everyone knows everything,
creates substantial heterogeneity
Less knowledge
moves it right
Everyone fighting for the same slot
Some people know exactly
where they can end up
Non-Financial Incentives
Development Economics
October 1, 2024
Making Moves Matter (2019)
The Model:
\frac{d E[u]}{de_i} = \sum^J_{j=1} u_{ij} \frac{ \partial \Pr ( j = r_i(y_i, \mathbf{y}_{-i}, \mathbf{P}))}{\partial y_i} = c'(e_i)
Everyone fighting for the same slot
AND no one knows if they have
enough to get there
Reduced effort as some outcomes
will not depend on their performance
Non-Financial Incentives
Development Economics
October 1, 2024
Making Moves Matter (2019)
Interact Prediction with Treatment to see Heterogeneity:
Non-Financial Incentives
Development Economics
October 1, 2024
Making Moves Matter (2019)
Interact Prediction with Treatment to see Heterogeneity:
Good assumption:
Assuming all the same seems not so good
- they know other's output "business-as-usual"
- they know little about their preferences
Non-Financial Incentives
Development Economics
Awards Unbundled (2014)
- What are the mechanisms that can drive the effectiveness of non-monetary incentives?
- Training for health workers in Zambia:
- Control
- Information
- T1: "Private Social Comparison" - rank information
- T2: "Public Social Comparison" - rank plus names of top 4 performers
- Awards
- T3: "Employer Recognition" - Top 4 get a letter from Ministry of Health
- T4: "Social Visibility" - One of the top 4 gets interview and photo in newsletter
- See result on test scores
October 1, 2024
Non-Financial Incentives
Development Economics
Awards Unbundled (2014)
- Training for health workers in Zambia:
- Control
- Information
- T1: "Private Social Comparison" - rank information
- T2: "Public Social Comparison" - rank plus names of top 4 performers
- Awards
- T3: "Employer Recognition" - Top 4 get a letter from Ministry of Health
- T4: "Social Visibility" - One of the top 4 gets interview and photo in newsletter
October 1, 2024
Non-Financial Incentives
Development Economics
Awards Unbundled (2014)
- Training for health workers in Zambia:
- Control
- Information - consistent with information avoidance
- T1: "Private Social Comparison" - rank information
- T2: "Public Social Comparison" - rank plus names of top 4 performers
- Awards
- T3: "Employer Recognition" - Top 4 get a letter from Ministry of Health
- T4: "Social Visibility" - One of the top 4 gets interview and photo in newsletter
October 1, 2024
Non-Financial Incentives
Development Economics
Awards Unbundled (2014)
- Training for health workers in Zambia:
- Control
- Information - consistent with information avoidance
- T1: "Private Social Comparison" - rank information - much worse (-.31 sd)
- T2: "Public Social Comparison" - rank plus names of top 4 performers
- Awards
- T3: "Employer Recognition" - Top 4 get a letter from Ministry of Health
- T4: "Social Visibility" - One of the top 4 gets interview and photo in newsletter
October 1, 2024
Non-Financial Incentives
Development Economics
Awards Unbundled (2014)
- Training for health workers in Zambia:
- Control
- Information - consistent with information avoidance
- T1: "Private Social Comparison" - rank information - much worse (-.31 sd)
- T2: "Public Social Comparison" - rank plus names of top 4 performers - much worse (-.38 sd)
- Awards
- T3: "Employer Recognition" - Top 4 get a letter from Ministry of Health
- T4: "Social Visibility" - One of the top 4 gets interview and photo in newsletter
October 1, 2024
Non-Financial Incentives
Development Economics
Awards Unbundled (2014)
- Training for health workers in Zambia:
- Control
- Information - consistent with information avoidance
- T1: "Private Social Comparison" - rank information - much worse (-.31 sd)
- T2: "Public Social Comparison" - rank plus names of top 4 performers - much worse (-.38 sd)
- Awards
- T3: "Employer Recognition" - Top 4 get a letter from Ministry of Health - much better (+.38 sd)
- T4: "Social Visibility" - One of the top 4 gets interview and photo in newsletter
October 1, 2024
Non-Financial Incentives
Development Economics
Awards Unbundled (2014)
- Training for health workers in Zambia:
- Control
- Information - consistent with information avoidance
- T1: "Private Social Comparison" - rank information - much worse (-.31 sd)
- T2: "Public Social Comparison" - rank plus names of top 4 performers - much worse (-.38 sd)
- Awards
- T3: "Employer Recognition" - Top 4 get a letter from Ministry of Health - much better (+.38 sd)
- T4: "Social Visibility" - One of the top 4 gets interview and photo in newsletter - much better (+.44 sd)
October 1, 2024
Non-Financial Incentives
Development Economics
Awards Unbundled (2014)
- Training for health workers in Zambia:
- Control
- Information - consistent with information avoidance
- T1: "Private Social Comparison" - rank information - much worse (-.31 sd)
- T2: "Public Social Comparison" - rank plus names of top 4 performers - much worse (-.38 sd)
- Awards
- T3: "Employer Recognition" - Top 4 get a letter from Ministry of Health - much better (+.38 sd)
- T4: "Social Visibility" - One of the top 4 gets interview and photo in newsletter - much better (+.44 sd)
- These effects cancel out in initial results but are shown through differences
October 1, 2024
Development Economics
Mission Motivation (R&R AER)
- One might think that public sector workers are there because of the mission
- Health workers in Pakistan:
- Mission-training treatment: watch, discuss and repeatedly engage with the mission
- Incentives treatment: bonus payments (to get comparison of effect)
- Both
- Placebo (focused training) and Control
- Evidence of crowding out (or crowding in)?
Non-Financial Incentives
October 1, 2024
Development Economics
Mission Motivation (R&R AER)
- Health workers in Pakistan:
- Mission-training treatment: watch, discuss and repeatedly engage with the mission
- 16.1% improvement in household visits
- Multiple other improvements in quality of services
- Incentives treatment: bonus payments (to get comparison of effect)
- 27.3% improvement in household visits
- No improvements in other areas
- Both
- Little evidence of crowding out, but financial incentives lose effectiveness
- Placebo (focused training) and Control
- Mission-training treatment: watch, discuss and repeatedly engage with the mission
Non-Financial Incentives
October 1, 2024
Development Economics
Mission Motivation (R&R AER)
- Does that mean there are real effects to mission / incentives => more household visits?
It would
seem yes
Non-Financial Incentives
October 1, 2024
Development Economics
Mission Motivation (R&R AER)
- Does that mean there are real effects to mission / incentives => more household visits?
What is
happening
here?
Does it convince you it is, in fact, the mission?
Non-Financial Incentives
October 1, 2024
Dev.Slides.10.1
By bjw95
