Should we be rewarded for doing what's good for us? | Deep Dive

The Incentive Dilemma: A Hypothetical Choice [00:00:00]

• Participants are presented with a choice: walk 10,000 steps daily for no reward or receive a voucher for completing the same task.
• The immediate preference is for the reward, suggesting a natural inclination towards incentives even for intrinsically beneficial activities.

  "Give me the points, give me the voucher, because if I'm doing something good for myself anyway, why not, you know, double dip this?"

The Rise of Rewarded Behaviors [00:01:00]

• The discussion highlights various Singaporean initiatives that reward positive actions, such as earning points for exercise, blood donors receiving health points, young people getting credits for skills, and rewards for reading.
• The core question is whether rewarding intrinsically good behaviors has a downside.

  "So the obvious response is, hey, what's the problem? If you are being rewarded to do the right thing, surely that's not a bad situation to be in, right?"

Transactional Nature of Policies [00:02:00]

• Dr. Serene Koh and Assistant Professor Lawrence Jin join the discussion to explore the effectiveness and implications of these incentive programs.
• It's noted that many government policies are inherently transactional, using taxes to discourage negative behaviors and subsidies to encourage positive ones.

  "So in some sense, I think providing incentives to do things like to read more or to exercise more are not dramatically more transactional than what's already been happening."

Nudging vs. Financial Incentives [00:05:00]

• Professor Jin clarifies the behavioral science definition of a "nudge" as modifying the decision environment without drastically changing incentives or restricting freedom.
• Financial incentives, he argues, are more than a nudge, suggesting they are a stronger intervention.

  "So in that sense, I would say financial incentives are not a nudge. It's actually more than a nudge."

A Year-Long Exercise Study [00:07:00]

• Professor Jin details a study involving 500 healthy adults who received small daily financial incentives (about $2/day) and a free Fitbit for meeting step goals over nine months.
• After the incentive period, researchers monitored their behavior for three months to observe persistence.

  "And then after that, we stopped giving them incentives. Okay. And we continue to monitor their behavior in the post-intervention period, the three months after that."

Surprising Persistence After Incentives Cease [00:09:00]

• Surprisingly, upon removal of the financial incentives, the study observed "perfect persistence" with zero average drop-off in activity levels.
• While most participants maintained their habits, a small percentage showed a slight decrease, and another small group even increased their activity.

  "So to our surprise, after nine months of small daily incentives, the moment we remove the incentives, we saw perfect persistence. So zero drop-off."

Factors for Habit Formation [00:11:00]

• The success of habit formation through incentives is attributed to several factors: sufficient duration (like nine months), high frequency of incentives (daily), and a balanced incentive design that is attractive initially but allows intrinsic value to take over.
• The study's participants were self-selected, potentially influencing the results, as motivated individuals may respond differently than a general population.

  "So first, it has to be sufficiently long. So like you said, habit formation requires time and repetition."

Behaviors That Respond Well (and Poorly) to Rewards [00:15:00]

• Behaviors related to physical well-being, like smoking cessation, tend to respond well because intrinsic benefits (better breathing, improved complexion) become apparent and can sustain the habit after rewards stop.
• Behaviors intended to be developed naturally or intrinsically, such as blood donation or reading, are less suitable for financial incentives, as they risk the "crowding out effect."

  "I think the things which are less, I guess, less appropriate or less sticky are things which you want people to have developed naturally or intrinsically, right?"

The "Crowding Out Effect" on Intrinsic Motivation [00:17:00]

• The "crowding out effect" is explained: providing rewards for an activity like blood donation can transform it from a charitable act into a transaction, diminishing the intrinsic motivation and potentially reducing participation.
• This phenomenon suggests that monetizing a good deed can devalue its perceived worth and the donor's intention.

  "The moment you provide a reward in exchange for donating blood, it no longer becomes an act of good, right?"

Financial Barriers vs. Behavioral Nudges [00:20:00]

• The discussion distinguishes between incentives that remove financial barriers (like "curiosity credits" for youth enrichment programs) and those that attempt to change behavior for non-financial reasons.
• It's argued that financial solutions are appropriate when the barrier is indeed financial, but incentivizing behaviors like reading or blood donation without addressing the actual barrier may be misguided.

  "Is the barrier to blood donation a financial one? Is the barrier to reading a financial one? If the answer is no, then, you know, it begs the question of then why are we incentivizing them to do that?"

Signaling Difficulty or Unpleasantness [00:23:00]

• A concern is raised that financial incentives might signal that an activity is difficult or unpleasant, potentially deterring individuals, especially children, from engaging with it willingly.
• While some believe the effect on children might be minimal, others worry about creating an expectation that desirable behaviors always require payment.

  "But I think it's for the people who are your actual target audience, who are the people who are not reading, don't like reading, maybe never thought about picking up a book, and they're like, see la, that's why you have to pay people because it's not nice to do."

The End Game: Exiting Incentives [00:27:00]

• A critical challenge is designing incentive schemes that allow for the eventual removal of rewards without behavior reverting to baseline.
• The ideal point for removal is theoretically when individuals no longer consider the reward when deciding to engage in the activity, but identifying this point practically is difficult.

  "The theoretical answer is the point where the person is not even thinking about rewards."

Context-Dependent Evidence and Future Monitoring [00:29:00]

• Evidence on the long-term persistence of incentivized behaviors varies significantly across studies and contexts.
• While some studies show strong persistence, others see complete reversion, highlighting the need for better understanding of individual readiness for incentive withdrawal.

  "So you see huge variation, heterogeneity in the results of these kinds of field studies."

Work, Payment, and Purpose [00:31:00]

• The conversation touches upon the idea that many people are paid to do things they don't like (work), questioning what's inherently wrong with incentivizing other less-liked activities.
• However, the distinction is made between "chores" and activities that foster a "love" or intrinsic value, like reading, which policymakers aim to nurture rather than simply get done.

  "A culture is not something that is born overnight. And so I think when we use those words, behaviors that we use those words to describe, those are the ones that I think instinctively you already know, oh, we probably shouldn't pay people for those."

Measuring Success and Unintended Consequences [00:33:00]

• A key challenge is measuring the success of incentive programs, especially when the goal is to foster critical thinking through reading, not just the act of reading itself.
• Concerns are raised about what activities are being substituted (e.g., sleep for reading) and the overall holistic impact.

  "But what if, as a very calculative young child, I was like, I'll just read comic books because comic books are the things that I like to read."

The Future of Incentives [00:35:00]

• The discussion concludes by acknowledging that while incentives can be an entry point to good behavior, their long-term consequences and the "exit strategy" for removing them remain complex and under-researched areas.
• The potential for people to become accustomed to being paid for actions they might not otherwise do is a significant concern for future policy.

  "So I guess what you guys touched upon is the idea that the incentives is an entry point to somewhat good behavior, to that good behavior. But we also have to talk about that exit, right?"