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

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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.

Suggested Citation

  • Tor Helge Holmås & Egil Kjerstad & Hilde Lurås & Odd Rune Straume, 2008. "Does monetary punishment crowd out pro-social motivation? The case of hospital bed-blocking," NIPE Working Papers 17/2008, NIPE - Universidade do Minho.
  • Handle: RePEc:nip:nipewp:17/2008
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    File URL: http://www3.eeg.uminho.pt/economia/nipe/docs/2008/NIPE_WP_17_2008.PDF
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    References listed on IDEAS

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    1. Gneezy, Uri & Rustichini, Aldo, 2000. "A Fine is a Price," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 1-17, January.
    2. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    3. Stephan Meier, 2006. "A survey of economic theories and field evidence on pro-social behavior," Working Papers 06-6, Federal Reserve Bank of Boston.
    4. Lai, Ching-Chong & Yang, Chih-Yu & Chang, Juin-Jen, 2003. "Environmental Regulations and Social Norms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(1), pages 63-75, January.
    5. Frey, Bruno S., 1993. "Motivation as a limit to pricing," Journal of Economic Psychology, Elsevier, vol. 14(4), pages 635-664, December.
    6. Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
    7. Roland Bénabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 489-520.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Does fear work?
      by chris dillow in Stumbling and Mumbling on 2011-07-31 18:55:23
    2. Does Fear of Job Loss Work?
      by Mark Thoma in Economist's View on 2011-08-03 12:33:00

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    Cited by:

    1. Joan Costa-Font & Sergi Jiménez-Martín & Cristina Villaplana, 2016. "Does Long-Term Care Subsidisation Reduce Unnecessary Hospitalisations?," Working Papers 2016-05, FEDEA.
    2. Joan Costa-i-Font & Sergi Jimenez-Martin & Cristina Vilaplana, 2016. "Does Long-Term Care Subsidisation Reduce Hospital Admissions?," CESifo Working Paper Series 6078, CESifo Group Munich.

    More about this item

    Keywords

    Motivation crowding; Intrinsic motivation; Monetary punishment; Hospital bed blocking;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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