Financial incentives work in many areas, but they are controversial. Critics worry that incentives designed to encourage certain behaviors may also lead to undesirable side effects. A recent study refutes these concerns.
Florian Schneider, an economist at the University of Zurich, has used the pandemic to answer a question that has long plagued behavioral economics: Do financial incentives designed to encourage socially desirable behavior lead to more harm than good in the long run?
Researchers and policymakers have been voicing their concerns for decades: financial incentives could crowd out intrinsic and prosocial motivations, undermine civic responsibility and foster the attitude that we should be financially compensated for every non-self-serving action. There are also moral considerations, explains Florian Schneider: "Do such incentives undermine self-determination by tempting people to act against their own values? And do they thereby reduce trust in the measure itself and in public institutions?"
To test these concerns, Florian Schneider, together with an international group of researchers, investigated a range of potentially negative consequences using a current and widely discussed measure: financial incentives for Covid-19 vaccination. He found the data for this in Sweden. In 2021, more than 5000 people took part in a study in which part of the group was offered the equivalent of about 20 Swiss francs for the first Covid vaccination. The researchers supplemented this data with records on demographics, income and attitudes.
The financial incentive increased the vaccination rate from 72 to 76 percent. However, Florian Schneider and his co-authors Armando Meier (University of Lausanne) and Pol Compos-Mercade (Lund University) were more interested in the effect of the financial incentive on the following aspects:Willingness to receive second and third (booster) vaccinations - without financial incentive.
The results speak for themselves: "Our study gives the all-clear: We did not find any undesirable side effects in any of the above-mentioned areas due to a moderate financial incentive for the Covid-19 vaccination", Florian Schneider summarizes the findings. It is particularly noteworthy that the researchers found no impact on attitudes towards individual civic responsibility, moral convictions or sense of self-determination.
One caveat remains, however, as Florian Schneider notes: "Our data come from a wealthy, Western country and are based on a moderate financial incentive. We do not yet know whether the findings can be generalized to poorer countries or to very high financial incentives."
That his research has been published in Nature, one of the leading scientific publications, is very rewarding for the economist, who obtained his PhD from the Department of Economics in 2020. "The question had been on my mind for a while. I was lucky that I found interested co-authors and that we had access to a current and comprehensive data-set with which we could answer one of the big questions of our subject, at least to some extent".
Schneider, F.H., Campos-Mercade, P., Meier, S. et al. Financial incentives for vaccination do not have negative unintended consequences. Nature (2023). https://doi.org/10.1038/s41586-022-05512-4