Saturday, May 5, 2012

5/5/2012: Incentivising Altruism?

Yesterday, I was honored to help launch a new - and a very promising and interesting, including from economics research point of view - initiative in Clonakilty, the Clonakilty Favour Exchange.

There has been some coverage of the Exchange launch here, here and here. And there's more forthcoming.

At the launch, myself and Bill Liao (a fantastically engaging speaker with a hell of a great message to share on the role of altruism and passion in our lives - social and individual alike) had a very interesting, albeit brief discussion as to the balance between the economic values of human capital and the social values, as well as individual well-being. Bill, absolutely correctly, in my opinion, raised the issue of how rewarding altruism and care for others in the community must be an integral part of the economic exchange.

Here is an interesting piece of recent research showing that traditional economic incentives, such as pay for altruistic endeavors, can empower greater engagement

Written by Nicola Lacetra, Mario Macis and Robert Slonim, the study "Rewarding Altruism? A Natural Field Experiment" was published as Milton Friedman Institute Working Paper No. 2011-010 (link here) and looks at the evidence "from a natural field experiment involving nearly 100,000 individuals on the effects of offering economic incentives for blood donations". Key findings are:
  • "Subjects who were offered economic rewards to donate blood were more likely to donate, and more so the higher the value of the rewards."
  • Subjects "were also more likely to attract others to donate, spatially alter the location of their donations towards the drives offering rewards, and modify their temporal donation schedule leading to a short-term reduction in donations immediately after the reward offer was removed." 
  • Although offering economic incentives... positively and significantly increased donations, ignoring individuals who took additional actions beyond donating to get others to donate would have led to an under-estimate of the total effect, whereas ignoring the spatial effect would have led to an over-estimate of the total effect." 
  • The authors also found "that individuals who received a reward by surprise were less likely to donate after the intervention than subjects who received no reward, suggesting that for some individuals a surprise reward adversely affected their intrinsic motivations."
In fact, as I recall, Bill explicitly raised a point that in some cases, rewarding for altruistic behavior can lead to apprehension on behalf of the person carrying out altruistic activity.

I am certainly looking forward to having a deeper discussion on the topic with Bill.

And in the mean time - massive thanks to the wonderful people of Clonakilty and to all engaged in the Clonakilty Favour Exchange for their hospitality and for their enthusiasm! Contagious stuff.

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