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Does monetary punishment crowd out pro-social motivation? The case of hospital bed-blocking

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Author Info
Tor Helge Holmås () (Health Economics Bergen (HEB), University of Bergen)
Egil Kjerstad () (Institute for Research in Economics and Business Administration (SNF) and Health Economics Bergen (HEB))
Hilde Lurås () (Helse Øst Health Services Research Centre, Akershus University Hospital, Norway.)
Odd Rune Straume () (Universidade do Minho - NIPE)

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Abstract

We study whether the use of explicit monetary incentives might be counter-productive. In particular, we focus on the effect of fining owners of long-term care institutions who prolong length of stay at hospitals. We outline a simple theoretical model, based on motivational crowding theory, deriving the conditions for explicit monetary incentives to have potentially counterproductive effects. In the empirical part, we exploit a natural experiment involving changes in the catchments areas of two large Norwegian hospitals. We find that bed-blocking is reduced when transferring long-term care providers from a hospital using monetary fines to prevent bed-blocking to a hospital not relying on this incentive scheme, and vice versa. We interpret these results as examples of monetary incentives crowding out agents’ intrinsic motivation, leading to a reduction in effort.

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Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 17/2008.

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Date of creation: 2008
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Handle: RePEc:nip:nipewp:17/2008

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Related research
Keywords: Motivation crowding; Intrinsic motivation; Monetary punishment; Hospital bed blocking;

Find related papers by JEL classification:
D64 - Microeconomics - - Welfare Economics - - - Altruism
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology

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References listed on IDEAS
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  1. Ching-Chong Lai & Chih-Yu Yang & Juin-Jen Chang, 2003. "Environmental Regulations and Social Norms," Asia-Pacific Financial Markets, Springer, vol. 10(1), pages 63-75, January. [Downloadable!] (restricted)
  2. Frey, Bruno S., 1993. "Motivation as a limit to pricing," Journal of Economic Psychology, Elsevier, vol. 14(4), pages 635-664, December. [Downloadable!] (restricted)
  3. Lai, Ching-Chong & Yang, Chih-Yu & Chang, Juin-Jen, 2003. "Environmental Regulations and Social Norms," International Tax and Public Finance, Springer, vol. 10(1), pages 63-75, January. [Downloadable!] (restricted)
  4. Benabou, Roland & Tirole, Jean, 2003. "Incentives and Prosocial Behavior," IDEI Working Papers 389, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jan 2006. [Downloadable!]
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  5. Roland Benabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," Review of Economic Studies, Blackwell Publishing, vol. 70(3), pages 489-520, 07. [Downloadable!] (restricted)
  6. Gneezy, Uri & Rustichini, Aldo, 2000. "A Fine is a Price," Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 1-17, January.
  7. Stephan Meier, 2006. "A survey of economic theories and field evidence on pro-social behavior," Working Papers 06-6, Federal Reserve Bank of Boston. [Downloadable!]
  8. Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Blackwell Publishing, vol. 15(5), pages 589-611, December. [Downloadable!] (restricted)
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