Does monetary punishment crowd out pro-social motivation? A natural experiment on hospital length of stay

Abstract

a b s t r a c tWe study whether the use of monetary incentives might be counter-productive. In particular, we analyse the effect of fining owners of long-term care institutions who prolong length of stay at hospitals. Exploiting a unique natural experiment involving changes in the catchment areas of two large Norwegian hospitals, we find that hospital length of stay are longer in the hospital using fines to reduce length of stay compared with the hospital not using monetary punishment. We interpret these results as examples of monetary incentives crowding-out agents' intrinsic motivation, leading to a reduction in effort.

Can Public and Private Sanctions Discipline Politicians? Evidence from the French Parliament

“…Similar evidence of crowding-out were found by Holmås et al (2010) in Norwegian hospitals where fines imposed on owners of long-term care institutions to decrease patients' length of stay in hospital had the opposite effect.…”

The Role of Human Resource Management (HRM) for the Implementation of Sustainable Product-Service Systems (PSS)—An Analysis of Fashion Retailers

“…It can be differentiated into intrinsic and extrinsic motivation. Extrinsic motivation occurs if an employee's desire to perform is driven by external outcomes that he would not attain from intrinsic motivation and is usually associated with any monetary rewards such as regular or bonus pay [180][181][182]. In contrast, intrinsic motivation refers to employees' motivation to engage in a behavior that arises from the self-desire to do something because it naturally provides a prospect of an emotional effect such as satisfaction or joy [182][183][184].…”

Enabling employees through co-development of performance measures

“…Due to the changed view on careers, more and more people are looking for jobs that are fulfilling their own personal needs and therefore intrinsic motivation plays an increasingly 5 192 Discussion important part in employment contracts (Hall, 1996(Hall, , 2004. Since incentives are generally seen as controllers of behavior, employees' intrinsic or autonomous motivation is inhibited when incentives are used (Deci, Koestner, & Ryan, 1999;Holmås, Kjerstad, Luråsd, & Straume, 2010). Since the extrinsic motivation given by the incentives cannot compensate for all of the loss in intrinsic motivation, employee job performance drops when incentives are used to motivate these employees (Deci, et al, 1999;Falk & Kosfeld, 2006;Wong-On-Wing, Guo, & Lui, 2010).…”

“…People generally perceive explicit incentives as a pressure (Deci, Koestner, & Ryan, 1999;Holmås, Kjerstad, Luråsd, & Straume, 2010). Thus, explicit incentives can lead to more controlled and therefore less autonomous 1 52 Introduction motivation and consequently to less employee job performance (Deci, et al, 1999;Falk & Kosfeld, 2006;Wong-On-Wing, Guo, & Lui, 2010).…”

“…Autonomous employee motivation is shown to positively influence employee performance, whereas the opposite-controlled motivation-undermines employee performance (see Gagné & Deci, 2005 for an overview). People generally see explicit incentives as a controller of their behavior (Deci, Koestner, & Ryan, 1999;Holmås, Kjerstad, Luråsd, & Straume, 2010). Therefore, explicit incentives can lead to less autonomous motivation and consequently to less employee job performance (Deci, et al, 1999;Falk & Kosfeld, 2006;Wong-On-Wing, et al, 2010).…”