The Use of Financial Incentives to Prevent Undesirable Behaviors
Behaviors that are putting people's health and well-being at risk are widespread in the developing world and some of them, like smoking and unhealthy diets, are on the rise. Some of these behaviors can be prohibited or prevented by taxation. But financial incentives such as conditional cash transfers are also increasingly proposed and tested to discourage such behaviors, in domains as varied as HIV/AIDS, drugs, alcohol, smoking, obesity, or early marriage prevention. This paper presents the theoretical justification for using such incentives, distinguishing between the price, income effects, and the nudge effects. The growing literature about the effectiveness of financial incentives to prevent undesirable behaviors is reviewed in detail for each type of harmful behavior. Finally, the paper discusses the long-term sustainability of such incentives, a key issue if they are to be scaled up beyond pilot programs and research projects. The current evidence on whether such incentives have an impact after they are discontinued is mixed. Some design features, like lotteries or commitment devices, could induce savings as well as increase effectiveness, therefore improving sustainability.
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018-05
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| Subjects: | INCENTIVES, BEHAVIOR MODIFICATION, HIV AIDS, SMOKING, ILLICIT DRUGS, ALCOHOL, OBESITY, EARLY MARRIAGE, CHILD MARRIAGE, |
| Online Access: | http://documents.worldbank.org/curated/en/613881525264515343/The-use-of-financial-incentives-to-prevent-undesirable-behaviors https://hdl.handle.net/10986/29769 |
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| Summary: | Behaviors that are putting people's
health and well-being at risk are widespread in the
developing world and some of them, like smoking and
unhealthy diets, are on the rise. Some of these behaviors
can be prohibited or prevented by taxation. But financial
incentives such as conditional cash transfers are also
increasingly proposed and tested to discourage such
behaviors, in domains as varied as HIV/AIDS, drugs, alcohol,
smoking, obesity, or early marriage prevention. This paper
presents the theoretical justification for using such
incentives, distinguishing between the price, income
effects, and the nudge effects. The growing literature about
the effectiveness of financial incentives to prevent
undesirable behaviors is reviewed in detail for each type of
harmful behavior. Finally, the paper discusses the long-term
sustainability of such incentives, a key issue if they are
to be scaled up beyond pilot programs and research projects.
The current evidence on whether such incentives have an
impact after they are discontinued is mixed. Some design
features, like lotteries or commitment devices, could induce
savings as well as increase effectiveness, therefore
improving sustainability. |
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