Abstract

Abstract In the discussion on the rational choice model of individual behavior, a growing emphasis has recently been placed on the importance of intrinsic motivation. Contrary to assumptions made in the standard economic literature, it is suggested that an individual's motivation to act may not be exclusively determined by external influences (incentives, restrictions) and (given) personal preferences, but, in addition, depends on intrinsically anchored ethical preferences. Intrinsic motivation may diminish if parallel external incentives, such as rewards or orders, come into play: Insofar as external intervention weakens the corresponding intrinsic motivation to act, the (normal) effect of relative prices is opposed by a (countervailing) crowding-out effect of intrinsic motivation. The effect of (over-) crowding-out has been thematized especially in the context of environmental policy. It was suggested that subsidies may support intrinsic incentives whereas taxes and licences (especially though command-and-control measures) tend to undermine them. This paper critically analyzes the impact of intrinsic behavior considerations on the evaluation of environmental policy instruments. It is argued that, if at all, economists' standard recommendations for policy design with respect to subsidies need not be revised even if intrinsic motivation plays any role for the agents' environmental bevavior. Furthermore, command-and-control policy might rather support than weaken intrinsic motivation.

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