As empiricists, we spend a lot of time worrying about the accuracy of economic and socio-behavioral measurement. We want our data to reflect the targeted underlying truth. Unfortunately misreporting, either accidental or deliberate, from study subjects is a constant risk. The deliberate kind of misreporting is much more difficult to deal with because it is driven by complicated and unobserved respondent intentions – either to hide sensitive information or to try to please the perceived intentions of the interviewer. Respondents who misreport information for their own benefit are said to be “gaming”, and the challenge of gaming extends beyond research activities to development programs that depend on the accuracy of self-reported information for success.
An interesting new paper by Ben Olken, Junko Onishi, and Susan Wong gives us some evidence on how incentives can make aid more effective. They look at a community block grant program in Indonesia and compare the effects of these grants with and without incentives. Incentives make a difference.
I’m currently attending this large conference in lovely Toronto and trying to pack-in as many sessions as possible. A handful of papers have stood out to me – two evaluations of on-going pay-for-performance schemes in health and two methodological papers related to the economics of obesity.
Economists have long noted that the price mechanism can be effective at modifying human behavior. Psychologists classify this aspect of behavior motivation as extrinsic motivation, meaning that the behavior is induced by external pressure. If I increase my hours worked due to an overtime premium then I can be said to exhibit extrinsic motivation - I am responding to the price schedule offered me. In contrast to extrinsic motivation, psychologists posit intrinsic motivation as arising from within the individual.
Numerous recent discussions on the future of development financing focus on the delivery of results and how to mainstream accounting for results in aid flows (see here for one review paper by Nemat Shafik). This “results based approach” to aid is gathering steam in many contexts.