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Social and Financial Incentives for Overcoming a Collective Action Problem

Author

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  • Bakhtiar, M. Mehrab
  • Guiteras, Raymond P.
  • Levinsohn, James

Abstract

Addressing public health externalities often requires community-level collective action. Due to social norms, each person’s sanitation investment decisions may depend on the decisions of neighbors. We report on a cluster randomized controlled trial conducted with 19,000 households in rural Bangladesh where we grouped neighboring households and introduced (either financial or social recognition) rewards with a joint liability component for the group, or asked each group member to make a private or public pledge to maintain a hygienic latrine. The group financial reward has the strongest impact in the short term (3 months), inducing a 7.5-12.5 percentage point increase in hygienic latrine ownership, but this effect dissipates in the medium term (15 months). In contrast, the public commitment induced a 4.2-6.3 percentage point increase in hygienic latrine ownership in the short term, but this effect persists in the medium term. Non-financial social recognition or a private pledge has no detectable effect on sanitation investments.

Suggested Citation

  • Bakhtiar, M. Mehrab & Guiteras, Raymond P. & Levinsohn, James, 2022. "Social and Financial Incentives for Overcoming a Collective Action Problem," CEnREP Working Papers 340054, North Carolina State University, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:nccewp:340054
    DOI: 10.22004/ag.econ.340054
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    Cited by:

    1. is not listed on IDEAS
    2. Augsburg, Britta & Foster, Andrew & Johnson, Terence & Lipscomb, Molly, 2024. "Evidence on designing sanitation interventions," Journal of Development Economics, Elsevier, vol. 171(C).
    3. Nguyen, Cuong Viet & Phung, Tung Duc, 2024. "Financial incentives for sanitation take-up: A randomized control trial in rural Vietnam," Journal of Health Economics, Elsevier, vol. 97(C).
    4. Gautam, Sanghmitra & Gechter, Michael & Guiteras, Raymond P. & Mobarak, Ahmed Mushfiq, 2024. "Encouraging Rural Sanitation Take-up: Insights from Experimental Evaluations of Interventions," CEnREP Working Papers 340057, North Carolina State University, Department of Agricultural and Resource Economics.
    5. Gautam, Sanghmitra & Gechter, Michael & Guiteras, Raymond P. & Mobarak, Ahmed Mushfiq, 2025. "To use financial incentives or not? Insights from experiments in encouraging sanitation investments in four countries," World Development, Elsevier, vol. 187(C).

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    Keywords

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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