This document discusses how changes to incentives can potentially be counterproductive. It explains that incentives induce behavior by comparing costs and benefits, but that their effects are often only temporary. When incentives are removed or changed, behaviors change as well. Additionally, incentives based on market norms rather than social norms can cause issues. The document provides examples of how incentives have unintended consequences and concludes that while incentives can be effective short-term, they often become ineffective over the long-term, especially if changed.

1. Can a Change in Incentives be
Counterproductive?
Change in Incentive = A change in behavioural
outcomes

2. In this presentation I will..

Explain what an economic incentive is and the
way in which it effects us

List the ways in which they can be
counterproductive

Provide Case Studies

Conclude on why economic incentives may not
always be the best approach to increase
productivity

3. An Incentive from a Economic
Perspective
“An incentive is something that induces a person
to act, such as the prospect of a punishment or
reward. Because rational people make
decisions by comparing costs and benefits,
they respond to incentives” - Principles of
Economics, Volume 1
People respond to incentives

4. Main aspects which can cause a change in
incentives to be counterproductive

An incentive can only be effective for so long

When the incentive is removed or changed,
behavioural outcomes will also change

Incentive dependency

Incentives based on market norms instead of
social norms

5. £1 101
£5 159
0 168

6. http://www.youtube.com/watch?v=W2hhIWbz0Ns

9. Conclusion
Although incentive can and do work this is mostly
only in the short-term and will become
ineffective in the long time, especially when
changed.

10. Conclusion
Although incentive can and do work this is mostly
only in the short-term and will become
ineffective in the long time, especially when
changed.