Saturday, 30 January 2010

Behavioural bin banter

George Osborne's article with Richard Thaler has taken some stick. One bit stuck out to me.
Because the academic literature shows the importance of a way a decision is framed, the Conservative party is working with councils to replace Labour's bin taxes with schemes that pay the public to recycle. In Windsor and Maidenhead our pilot scheme has already increased recycling rates by 30%.
This is interesting for a number of reasons. First is the shift away from fining people. One of interesting stories in Dan Ariely's Predictably Irrational is about an Israeli day care centre that started to fine people who picked their kids up late. The result was that the number of parents picking kids up late went up. Ariely suggests that this is an example of a social norm (a responsible parent should pick their kids up on time) being replaced by a market norm (a bit of extra time costs/can be bought). So actually you can see a reason why fining people might not be the best approach to achieve the desired behaviour.

However coming from another perspective, one could see how paying people to recycle might also have a negative effect, because it might crowd out intrinsic motivation. The first third or so of Dan Pink's new book Drive (which I've mentioned previously) covers how and when this happens. On balance I actually think this is unlikely, because whilst I might be intrinsically motivated to recycle the task itself is repetitive, and Pink's review of the research suggests that actually tying rewards to such tasks can deliver. (That doesn't mean that there won't be some people who are negatively affected by being paid to do something that they want to do, but it might not be a significant proportion).

However Pink also suggests that over the longer term dangling carrots can become less effective - and if you take them away (perhaps because the council needs to cut costs) there can be damaging results. The extrinsic motivation - the reward - has gone, but in the meantime intrinsic motivation has been eroded by the introduction of payment.

Chuck in another concept - loss aversion. Given that we are supposed to feel losses twice as much as gains, wouldn't we think that actually fining ought to work more effectively? So maybe we should question if there something else going on that has caused the changed behaviour?

But finally, does this initiative necessarily have anything to do with framing (or any kind of insight from behavioural economics), as is suggested? The results could just come from the way the incentives are structured. The fine may not have been large enough to make incurring the cots of recycling (ie lost free time) the most attractive option. In contrast the council may now be paying more than is necessary to get people to give up the time to recycle. The jump in recycling could easily be a perfectly rational response to the incentives on offer.

Would be interesting to find out a bit more about the scheme to see the real story. I'm not convinced this article has nailed it.

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