My fabulous colleague, Ruth Grant’s, new book, Strings Attached, is reviewed in yesterday’s New York Times. As a bit of background, Ruth is a Professor of Political Science at Duke University, specializing in political theory with a particular interest in early modern philosophy and political ethics. She is the author of John Locke's Liberalism and of Hypocrisy and Integrity: Machiavelli, Rousseau and the Ethics of Politics. She is also the editor of two collections of essays; Naming Evil, Judging Evil and In Search of Goodness.
But it is her newest book, Strings Attached, that currently has the NY Times’ attention, and mine as well. In it, Grant frames the ethics of incentives within a broader framework that I find infinitely richer than most that I have come across recently. Specifically, Grant frames the ethics of incentives within an analysis of power. In doing so, Grant insists that incentives are more than just a voluntary bargained-for-exchange. Instead, they are one of the mechanisms employed to get people to do things that they otherwise would not. As such, they are – like all kinds of power – subject to abuse.
One of the things that I particularly appreciate about Grant’s analysis is the triad of coercion, persuasion, and incentives that Ruth sets up – all three are exercises of power and all three entail ethical considerations. All three are also judged under the same standards of legitimacy of purpose, voluntariness, and effect on the character of the parties involved.
Ruth is quite a bit more skeptical of incentives, and quite a bit more accepting of persuasion, than I am, but her critique of some of the assumptions regarding incentives is important and, for me at least, eye opening. For example, her historical treatment of the rise of incentives and the insight that incentives are often employed in the context of an authority relationship – adult/child, employer/employee, and government/citizen, for example – is a helpful means of getting a handle on what it is about some incentives that instinctively rub many people the wrong way.
I am not yet persuaded by Grant’s preference for persuasion versus incentives as a means of facilitating democratic deliberation and decision-making. Says Grant:
When incentives are employed, there is no need to convince people that collective goals are good or to motivate them to pursue those goals by appeals to rational argument, personal conviction, or intrinsic motivation. Experts and powerful elites can thus direct institutions and shape people’s choices without the sort of public discussion and consent that ideally characterize democratic processes and decision-making.
But when we move away from ideal democratic processes to real ones, I am not so sure that the types of persuasion employed by powerful elites or the decision-making processes of those subject to their influence are so benign, or that they fare so well as compared to incentives.
One last comment on crowding out, which I think is more complex than one would gather from the book and the Times review. There is a large literature on crowding out, some of which finds support for the crowding out theory and some of which does not. Moreover, the findings appear to be very sensitive to experimental conditions, such that it is not always clear what factors are driving the experimental outcomes. Finally, any crowding out effects can sometimes be overcome through other interventions, such as an option to donate any monetary rewards to charity. In other words, crowding out appears to be a very complicated phenomenon and, in most settings, at least, it would, to my mind, be premature to conclude that we might predict with confidence the outcome of a well-designed incentive structure.
To illustrate, the Times discusses a study, referenced in Strings Attached, in which women offered cash to donate blood were almost 50% less likely to give blood than women who were offered no money. Male subjects exhibited no such crowding out. (The NY Times references a “study of British women,” though I believe they mean this study, which is also the one Ruth cites to in the book). But there is no mention that the study actually measured the willingness of subjects to undergo a health examination, which was a precondition to donate blood, rather than actual blood donations (a test condition that could operate differently on men and women), that the monetary offer was only about US $7, and that the crowding out effect disappeared when subjects were given the option to donate the proceeds to charity.
A more recent NBER working paper by Nicola Lacetera, et. al., Rewarding Altruism? (released after the book was in press, I believe), a natural field experiment involving nearly 100,000 individuals, contradicts these findings. Lacetera finds a large, positive effect of economic incentives on blood donations, with limited or no crowding out in both the short and long term. They find no gender effects. All of this is just to say that crowding out appears a complicated phenomenon, and one that we’re still learning about.
Don’t be fooled into thinking that because Grant is a respected political theorist and the book deals with weighty ethical issues it will be dry or abstract. Grant’s theories and examples are extraordinarily timely and relevant. The section on IMF loan conditionality caused me to reframe the entire Greek debt crisis debate in terms of coercion, persuasion, and incentives. And the sections on recruiting medical research subjects (which, perhaps surprisingly, Grant finds relatively benign) and pleas bargaining will be of interest to those working on medical ethics and the criminal justice system, respectively. A highly recommended read!