Policies Designed for Self-Interested Citizens May Undermine “The Moral Sentiments”: Evidence from Economic Experiments

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Science (Impact Factor: 33.61). 07/2008; 320(5883):1605-9. DOI: 10.1126/science.1152110
Source: PubMed


High-performance organizations and economies work on the basis not only of material interests but also of Adam Smith's "moral sentiments." Well-designed laws and public policies can harness self-interest for the common good. However, incentives that appeal to self-interest may fail when they undermine the moral values that lead people to act altruistically or in other public-spirited ways. Behavioral experiments reviewed here suggest that economic incentives may be counterproductive when they signal that selfishness is an appropriate response; constitute a learning environment through which over time people come to adopt more self-interested motivations; compromise the individual's sense of self-determination and thereby degrade intrinsic motivations; or convey a message of distrust, disrespect, and unfair intent. Many of these unintended effects of incentives occur because people act not only to acquire economic goods and services but also to constitute themselves as dignified, autonomous, and moral individuals. Good organizational and institutional design can channel the material interests for the achievement of social goals while also enhancing the contribution of the moral sentiments to the same ends.

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    • "As Bruno Frey (1997) evocatively puts it, a constitution for knaves may produce knaves by crowding out civic virtues. Thus, policies designed for self-interested citizens may undermine the moral values that lead people to act altruistically or in other public-spirited ways (Bowles, 2008). Treating environmental problems as externalities and people as self-interested actors with unrestrained capacities to damage the environment is likely to foster such behavior and thwart altruistic behavior, creating the need for constant monitoring or endless rewards. "
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    Ecological Economics 09/2015; 117. DOI:10.1016/j.ecolecon.2015.06.011 · 2.72 Impact Factor
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    • "For instance, the effect of framing for (environmental) decision making is widely acknowledged in psychology (Tversky and Kahneman 1981, Satterfield et al 2000, Hsee and Rottenstreich 2004, Bolderdijk et al 2013) and linguistics (Lakoff 2010). For the conservation context, there is some empirical evidence that economic incentives (e.g., within PES) can crowd out non-economic motivations for conservation action (Bowles 2008, Rode et al 2015). Framing effects are one among several possible psychological mechanisms to explain such an effect. "
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    • "The role of intermediary agents is thereby increasingly recognized (see also Bosselmann and Lund, 2013; Hayes et al., 2015; and Pham et al., 2010; Schomers et al., 2015). Some authors even caution that monetary compensations may 'crowd out' non-profit-based motivations for environmental governance (Bowles, 2008; Muradian et al., 2013; Rode et al., 2014; Van Hecken and Bastiaensen, 2010b; Vatn, 2010). This follows from the many contextual factors that influence the outcomes of PES schemes, including local notions of fairness and justice, and the psychological , cultural, and social embeddedness of the desired behavior (Muradian et al., 2013). "
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