Sam Bowles talk TODAY at Harvard on morals and incentives
Aaron Swartz
Talk by Sam Bowles
Tuesday, October 19 from 12:00 - 1:30 p.m.
1305 William James Hall
33 Kirkland Street
"Why do economic incentives (sometimes) crowd out pro social motives?"
Samuel Bowles, Santa Fe Institute
Psychologists have long known, and economists recently documented in
behavioral experiments the fact that explicit incentives such as
subsidies, taxes, and fines sometimes crowd out social preferences
that internalize the effects of ones' actions on others or diminish
ethical
or intrinsic motivation to contribute to the public good. As a result
incentives may be less effective than predicted by economic models or
even have the opposite of the intended effect. Yet sometimes the very
same incentives work exactly as economic models predict (their effect
on
behavior being additive to that of social preferences). And in yet
other cases (not common), crowding in occurs; economic incentives and
pro-social preferences interacting synergistically (as complements
rather than as substitutes, in economics).
Devising adequate incentives to promote the public good requires an
understanding of why these non-additive crowding effects occur, and
how
policy design may take account of them. Evidence from behavioral
experiments indicates that crowding may take two forms: categorical
(the
effect on values depends only on the presence or absence of the
incentive) or marginal (the effect depends on the extent of the
incentive). There are also two mechanisms underlying the non-additive
effects of incentives and pro-social preferences. The incentive may
provide information or a cue to appropriate behavior in which cases
the individual's preferences are situation-dependent (state-dependent,
in
economics). Or the incentive may alter the process by which
individuals learn new preferences which then persist across different
situations (in
which case preferences are endogenous.) Using this 2x2 framework I
will provide evidence that incentives per se are not the proximate
cause of
the crowding phenomenon.
--
Samuel Bowles
Santa Fe Institute Dipartimento di Economia Politica
1399 Hyde Park Rd Universita di Siena
Santa Fe,NM,87501,USA Piazza San Francesco,7
Phone: (505) 984 8800 Siena 53100, Italy
Fax:(505) 982 0565