Comparing the effects of non-monetary incentives and monetary incentives on prosocial behavior

Abstract

The crowding-out effects predict that offering monetary incentives to complete a task might negatively affect task performance because the monetary rewards crowd out non-monetary sources of value that people derive from task completion. In this study, we revisit a well-known field experiment by Gneezy and Rustichini (2000) that provides evidence for crowding-out effects in the context of prosocial behavior. We test the robustness of these effects using a larger sample and adjust the experiment's design to better elucidate the role of non-monetary incentives in prosocial behavior. Specifically, we assigned 245 pairs of high school students to different incentives for collecting donations for charity: low monetary incentives (1 % of total donations collected), high monetary incentives (10 % of total donations collected), non-monetary incentives (enhanced task importance and public recognition), or no external incentives. We made it explicit to the students that the monetary incentives were funded by the researchers, not the charities. In line with crowding-out effects and Gneezy and Rustichini's (2000) findings, our results show that low monetary incentives elicit lower performance (collected donations) compared with the absence of external incentives. Importantly, non-monetary incentives elicit higher performance compared with either monetary incentives or the absence of external incentives.