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Do Not Trash the Incentive! Monetary Incentives and Waste Sorting

Author

Listed:
  • Alessandro Bucciol

    (University of Verona
    University of Amsterdam)

  • Natalia Montinari

    (Max Planck Institute of Economics.)

  • Marco Piovesan

    (Harvard Business School)

Abstract

This paper examines whether monetary incentives are an effective tool for increasing domestic waste sorting. We exploit the exogenous variation in the pricing systems experienced during the 1999-2008 decade by the 95 municipalities in the district of Treviso (Italy). We estimate with a panel analysis that pay-as-you-throw (PAYT) incentive-based schemes increase by 12.2% the ratio of sorted to total waste. This increase reflects a change in the behavior of households, who keep unaltered the production of total waste but sort it to a larger extent. In addition, we show that several factors that may discourage local administrators from adopting PAYT - illegal dumping and higher cost of management - are not important at the aggregate level. Hence, our results support the use of PAYT as an effective tool to increase waste sorting.

Suggested Citation

  • Alessandro Bucciol & Natalia Montinari & Marco Piovesan, 2011. "Do Not Trash the Incentive! Monetary Incentives and Waste Sorting," Harvard Business School Working Papers 11-093, Harvard Business School.
    • Handle: RePEc:hbs:wpaper:11-093
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    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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