The Power of Incentives, Monday Morning Edition

26 November 2007 at 10:48 am 4 comments

| Peter Klein |

1. The Vatican is trying incentive pay. (Prediction from Bob, Jeff, and company: performance will fall as worldly, extrinsic motivation pushes out warm, ethereal “feelings for the entity.”) (Via Luke Froeb)

2. My friend Tim Terrell reports on this new program at Wofford College:

My college recently instituted a free bicycle sharing program on campus. There was a lot of self-satisfied puffery from those responsible for the program, with even a “Blessing of the Bikes” ceremony carried out by our chaplain.

Informal polls I conducted in my classrooms indicated that the bikes are being tossed in the shrubbery, left unlocked, used as makeshift shot-puts on Fraternity Row, etc. etc. I passed one left lying on the grass, unlocked of course, on my short walk in to my office this morning. One student says he saw a vagrant in the neighborhood riding around on one. After a little over a week, another student remarked that most of the bikes were in the maintenance shop for repairs. We are now subject to a barrage of flyers, e-mail announcements, etc. pleading with students to treat the bikes well and lock them up (there is a single code to all the combination locks — want to guess how long it took people from the neighboring campus to figure out  the code?).

Bob and Jeff, what happened? Surely all these opportunistic, ethically challenged students can’t be economics majors.

Entry filed under: - Klein -, Ephemera. Tags: .

Capabilities and Comparative Advantage Pure Inflation and Nominal Interest Rates

4 Comments Add your own

  • 1. nordsieck  |  26 November 2007 at 11:17 am

    Sounds like destroying bikes became a sort of social signaling. I have seen well functioning shared bike systems. Perhaps these particular people had too much of the juvenile destructive impulse?

    As a side note, if my analysis is correct, how easy would it be to reverse the social signal ala littering?

  • 2. Samir Nurmohamed  |  26 November 2007 at 12:29 pm

    Sounds like a tragedy…of the commons. I guess that’s what happens when you don’t consult the economics department before implementing a campus policy.

  • 3. Peter Klein  |  27 November 2007 at 9:25 am

    Gil Guilory adds: “[C]ommon bicycle programs work very well at hundreds, if not thousands, of industrial sites around the world. It is quite common that a Shell, or ExxonMobil, or ConocoPhillips complex will have bikes that employees use in exactly the way that college administrators hope college students would, being able to move from control room to admin building to canteen, etc. Of course, these are all controlled-access properties, and everyone on site is either an employee or contractor of the company, there is little incentive to abuse or destroy the bikes, and positive incentives to maintain them.

    “If a young economist-in-training wanted a story with legs, it would contrast the tragedy of the commons of a university bike sharing program with the success of a nearby industrial facility’s bike sharing program, explaining the differences with economics.”

  • 4. dhoopes  |  27 November 2007 at 11:06 pm

    Somewhere in this analysis we also have to note that although college students can appear to be adults appearances can be deceiving. As comments above imply, this system works other places. My guess is having grown-ups helps. On the other hand, one would be pretty obvious in the middle of a refinery or corporate park tossing a bike into some bush. Student’s come and go in such crowds it’s easy to be anonymous.

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