'Room for Debate', the opinion pages of the New York Times, host a piece by BSG Associate Professor Anandi Mani about incentives and social change.
Policies to tackle social problems often fail because they are targeted at individuals, without consideration for how much individual choices are influenced by the choices of others within the same situational or cultural context.
But group incentive schemes — where rewards are offered to a community based on the social outcomes of all who participate — can help propagate coordinated social change. This is where the $100 million comes in: It is not a lot of money for a one-size-fits-all solution, but it could stretch surprisingly far if offered as a reward to a community, conditional on group, and not individual, outcomes.
To illustrate this concept with a concrete example, consider female adult illiteracy. Roughly half a billion adult women worldwide can't read, and this positively correlates with a host of adverse outcomes related to child health and education, fertility and sexual health, and economic productivity.
The odds that a person is illiterate are higher if many around her are illiterate too. To shift a community from a norm of female illiteracy to literacy, at least some portion of the $100 million could be used to offer group-level rewards, but under two conditions: A minimum number of women from the community have to sign up for a literacy program, and every member of the group must achieve a minimum level of literacy by the end of the program.
The reason this approach is more effective than individual incentive schemes (i.e., paying one person to learn how to read) is partially because adopting any new idea or behavioral change is easier when many are doing it together. When a reward is conditional on the outcome of an entire group of people, there is both motivation to offer peer support and to exert peer pressure (from stronger to weaker members). Also, simply put, peers can influence learning outcomes.
Over time, this method of rewards could reduce the cost of spreading adult literacy and also pave the way for greater children’s literacy.
This group-based reward mechanism can be applied similarly to other social problems. Creating competition among groups, by making the size of the reward larger for early adopter communities, can jump-start social change.