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Social and Financial Incentives for Overcoming a Collective Action Problem

Author

Listed:
  • M. Mehrab Bakhtiar
  • Raymond Guiteras
  • James A. Levinsohn
  • Ahmed Mushfiq Mobarak

Abstract

Addressing public health externalities often requires community-level collective action. Each person’s sanitation behavior can affect the health of neighbors. We report on a cluster randomized controlled trial conducted with 19,000 households in rural Bangladesh where we randomized (1) either group financial incentives or a non-financial “social recognition” reward, and (2) asking each household to make either a private pledge or a public pledge to maintain hygienic latrines. 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. Getting people to publicly commit to maintaining and using a hygienic latrine in front of their neighbors induced a 4.2-6.1 percentage point increase in hygienic latrine ownership in the short term. In the medium term (15 months), the effect of the financial reward dissipates while the effect of the public commitment persists. Neither social recognition nor private commitments produce effects statistically distinguishable from zero.

Suggested Citation

  • M. Mehrab Bakhtiar & Raymond Guiteras & James A. Levinsohn & Ahmed Mushfiq Mobarak, 2021. "Social and Financial Incentives for Overcoming a Collective Action Problem," NBER Working Papers 29294, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29294
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    2. 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).
    3. 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.
    4. Augsburg, Britta & Foster, Andrew & Johnson, Terence & Lipscomb, Molly, 2024. "Evidence on designing sanitation interventions," Journal of Development Economics, Elsevier, vol. 171(C).
    5. 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).

    More about this item

    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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