Imagine That You Are The Owner Of A Day Care Center

Imagine That You Are The Owner Of A Day Care Center And That Parents C

Imagine that you are the owner of a day-care center and that parents consistently pick their children up late. Your clearly stated policy is that children are supposed to be picked up by 5:30 pm. This makes pick-up time uncomfortable for all involved. A couple of economists who heard of this dilemma suggested a simple solution: fine the tardy parents. They then decided to test this solution in a study of ten day-care centers in Haifa, Israel. For four weeks they tracked the number of late pick-ups and then in the fifth week a $3 fine per child per incident of lateness was enacted. After the fine was enacted, the number of late pickups promptly went up. What is the incentive in this example? Do you think this means that incentives don't matter? Are there incentives other than economic incentives? Why Incentive Do Not Work? See this video and make your discussion lively.

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The scenario presented highlights a critical paradox in the application of economic incentives, emphasizing that incentives are not always straightforward or effective in influencing behavior. Initially, the imposition of a $3 fine for late pick-ups was intended to discourage parents from arriving late. The underlying incentive was monetary: the penalty was meant to motivate parents to adhere to the established pick-up time of 5:30 pm. However, the observed increase in late pickups following the fine’s implementation suggests that financial penalties can sometimes have unintended consequences, challenging the assumption that monetary incentives always produce the desired behavioral change.

One possible explanation for the counterintuitive result is the concept of psychological reactance or rebellion, where individuals respond to constraints or penalties by doing the opposite of what is expected. In this case, parents might have perceived the fine as an unfair punishment or as an annoyance, thereby diminishing its deterrent effect. Instead, they may have rationalized that paying the fine was a small price to pay for the flexibility they desired, or perhaps they viewed the fine as a fee that simply reinforced their habit of being late. Additionally, the frequency and familiarity with the fine might have rendered it less effective over time, as parents could have become habituated to the penalty, aligning with Steve Levitt’s argument that incentives often lose their effectiveness once they become expected and routine (Levitt, 2010).

Beyond monetary incentives, there are numerous other types of motivation that influence behavior. For instance, intrinsic motivation, which stems from personal values, emotional bonds, or social norms, can be more powerful than external rewards or penalties. In the context of child care, parental concern for their children’s emotional well-being and desire to demonstrate responsible parenting might serve as significant non-economic incentives. For example, understanding that punctual pick-up fosters a sense of security and routine for children can motivate parents to arrive on time, regardless of fines.

Psychological and social incentives often play a vital role. These include recognition, peer pressure, societal expectations, and the desire to maintain a positive self-image. For some parents, being labeled as responsible or caring can be a more effective motivator than monetary penalties. Conversely, monetary incentives can sometimes undermine intrinsic motivation, leading to a phenomenon known as the “crowding out effect,” where external rewards diminish internal motivation (Deci & Ryan, 1985).

Furthermore, incentives may fail due to issues of perception and context. If parents perceive the fine as a tax or a fee rather than a punishment, they might continue their behavior without significant change. Also, if the penalty is too modest relative to the inconvenience or time lost, it may not alter behavior effectively. Conversely, overly punitive fines might foster resentment or avoidance rather than compliance.

The effectiveness of incentives, therefore, hinges on thoughtful implementation. Incentives should align with individuals’ values, perceptions, and context. As Levitt (2010) notes, incentives work best when they are immediate, salient, and perceived as fair. Otherwise, they risk backfiring or becoming irrelevant. In the daycare scenario, exploring non-economic motivators such as fostering parental responsibility, shared community norms, or emphasizing the emotional benefits for children might produce more sustainable behavioral change than monetary fines alone.

In conclusion, incentives, whether economic or non-economic, are complex tools that influence behavior in multifaceted ways. The example from the daycare centers demonstrates that poorly designed or misunderstood incentives can have unintended consequences, underscoring the importance of considering psychological, social, and cultural factors. A holistic approach that combines appropriate incentives with fostering intrinsic motivation and social norms is more likely to achieve desired outcomes in managing behaviors such as punctual child pick-up.

References

• Deci, E. L., & Ryan, R. M. (1985). Intrinsic motivation and self-determination in human behavior. Springer Science & Business Media.
• Levitt, S. D. (2010). Why Incentives Don’t Work. New York Times. https://www.nytimes.com/2010/09/19/opinion/19levitt.html
• Frey, B. S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, 15(5), 589-611.
• Kohn, A. (1993). Punished by Rewards: The Trouble with Gold Stars, Incentive Plans, A’s, Praise, and Other Bribes. Houghton Mifflin Harcourt.
• Gneezy, U., & Rustichini, A. (2000). Pay Enough or Don’t Pay At All. The Quarterly Journal of Economics, 115(3), 791-810.
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• Ryan, R. M., & Deci, E. L. (2000). Intrinsic and Extrinsic Motivations: Classic Definitions and New Directions. Contemporary Educational Psychology, 25(1), 54-67.
• Higgins, E. T. (2006). Value from Regulatory Fit. Current Directions in Psychological Science, 15(4), 209-213.
• Frey, B. S., & Osterloh, M. (2002). Successful Management by Motivation: Balancing Intrinsic and Extrinsic Incentives. Springer Science & Business Media.