Nov. 9th, Uri Gneezy, Ph.D.– Incentives and Behavior Change

Dr. Uri Gneezy, a guest of the IFREE/ESI Lecture SeriesAbstract: Economists often emphasize that “incentives matter.” The basic “law of behavior” is that higher incentives will lead to more effort and higher performance. Employers, for example, often use extrinsic incentives to motivate their employees. In recent years, the use of incentives in behavioral interventions has become more popular. Should students be provided with financial incentives for increased school attendance, for reading, or for better grades? Will financial incentives encourage higher contributions to public goods, like blood donations? Should programs to reduce smoking or to encourage exercise include a monetary incentive? These applications of incentives have provoked heated debate. Proponents of using incentives in behavioral interventions argue, for example, that monetary incentives can be helpful in getting people to study or exercise more. Opponents believe that using incentives in those areas could backfire, because extrinsic incentives may in some way crowd out intrinsic motivations that are important to producing the desired behavior.

This talk will discuss some general aspects of how extrinsic incentives may come into conflict with other motivations as well as the research literature on three important examples in which monetary incentives have been used in a non-employment context to foster the desired behavior: education; increasing contributions to public goods; and helping people change their lifestyles. The conclusion sums up some lessons on when extrinsic incentives are more or less likely to alter such behaviors in the desired directions.

Bio: Uri Gneezy’s  focus is on putting behavioral economics to work in the real world, where theory can meet application. I’m looking for basic research as well as more applied approaches to such topics as incentives-based interventions to increase good habits and decrease bad ones, Pay-What-You-Want pricing, and the detrimental effects of small and large incentives. In addition to the traditional laboratory and field studies, Gneezy is currently working with several firms, conducting experiments in which we’re using basic findings from behavioral economics to help companies achieve their traditional goals in non-traditional ways.  Before joining the Rady School, Gneezy was a faculty member at the University of Chicago, Technion and Haifa. Gneezy received his Ph.D. from the Center for Economic Research in Tilburg.

For more information on the IFREE/ESI Lecture Series, please check out our website.