A Crowding-out Effect for Relative Income

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A Crowding-out Effect for Relative Income

Author Info

Benno Torgler
Bruno S. Frey
Markus Schaffner
Sascha L. Schmidt

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Abstract

The risk of external interventions crowding-out intrinsic motivation has long been established in economics. This paper introduces a new dimension by arguing that a crowding-out effect does become possible if individuals receive higher relative compensation. Using a unique, large data set that focuses on 26 seasons in basketball (NBA) we find empirical support for a relative crowding-out effect. Performance is reduced as a reaction to a relative income advantage.

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Paper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2008-20.

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Date of creation: Sep 2008
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Handle: RePEc:cra:wpaper:2008-20

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Paper
- Benno Torgler & Bruno S.Frey & Markus Schaffner & Sascha L.Schmidt, 2008. "A Crowding-Out Effect for Relative Income," School of Economics and Finance Discussion Papers and Working Papers Series 236, School of Economics and Finance, Queensland University of Technology. [Downloadable!]

Find related papers by JEL classification:
D00 - Microeconomics - - General - - - General
D60 - Microeconomics - - Welfare Economics - - - General
L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-10-07 (All new papers)
NEP-CBE-2008-10-07 (Cognitive & Behavioural Economics)
NEP-LAB-2008-10-07 (Labour Economics)
NEP-LTV-2008-10-07 (Unemployment, Inequality & Poverty)

References listed on IDEAS
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Other versions:
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