Large Financial Incentives Research Articles

Financial incentives for smoking cessation in low-income smokers: study protocol for a randomized controlled trial

BackgroundTobacco smoking is the leading avoidable cause of death in high-income countries. The smoking-related disease burden is borne primarily by the least educated and least affluent groups. Thus, there is a need for effective smoking cessation interventions that reach to, and are effective in this group. Research suggests that modest financial incentives are not very effective in helping smokers quit. What is not known is whether large financial incentives can enhance longer-term (1 year) smoking cessation rates, outside clinical and workplace settings.Trial designA randomized, parallel groups, controlled trial.MethodsParticipants: Eight hundred low-income smokers in Switzerland (the less affluent third of the population, based on fiscal taxation).Intervention: A smoking cessation program including: (a) financial incentives given during 6 months; and (b) Internet-based counseling. Financial rewards will be offered for biochemically verified smoking abstinence after 1, 2, and 3 weeks and 1, 3, and 6 months, for a maximum of 1,500 CHF (1,250 EUR, 1,500 USD) for those abstinent at all time-points. All participants, including controls, will receive Internet-based, individually-tailored, smoking cessation counseling and self-help booklets, but there will be no in-person or telephone counseling, and participants will not receive medications. The control group will not receive financial incentives.Objective: To increase smoking cessation rates.Outcome: Smoking abstinence after 6 and 18 months, not contradicted by biochemical tests. We will assess relapse after the end of the intervention, to test whether 6-month effects translate into sustained abstinence 12 months after the incentives are withdrawn.Randomization: Will be done using sealed envelopes drawn by participants.Blinding: Is not possible in this context.DiscussionSmoking prevention policies and interventions have been least effective in the least educated, low-income groups. Combining financial incentives and Internet-based counseling is an innovative approach that, if proven acceptable and effective, could be later implemented on a large scale at a reasonable cost, decrease health disparities, and save many lives.Trial registrationCurrent Controlled Trials ISRCTN04019434.

Financing renewable energy infrastructure: Formulation, pricing and impact of a carbon revenue bond

Renewable energy systems depend on large financial incentives to compete with conventional generation methods. Market-based incentives, including state-level REC markets and international carbon markets have been proposed as solutions to increase renewable energy investment. In this paper we introduce and formulate a carbon revenue bond, a financing tool to complement environmental credit markets to encourage renewable energy investment. To illustrate its use, we value the bond by predicting future revenue using stochastic processes after analyzing historical price data. Three illustrative examples are presented for renewable energy development in three different markets: Europe, Australia and New Jersey. Our findings reveal that the sale of a carbon revenue bond with a ten year maturity can finance a significant portion of a project's initial cost.

A Landholder-Based Approach to the Design of Private-Land Conservation Programs

Many ecosystems exist primarily, or solely, on privately owned (freehold) or managed (leasehold) land. In rural and semirural areas, local and regional government agencies are commonly responsible for encouraging landholders to conserve native vegetation and species on these private properties. Yet these agencies often lack the capacity to design and implement conservation programs tailored to rural and semirural landholdings and instead offer one program to all landholders. Landholders may elect not to participate because the program is irrelevant to their property or personal needs; consequently, vegetation-retention objectives may not be achieved. We differentiated landholders in Queensland, Australia, according to whether they derived income from the land (production landholders) or not (nonproduction landholders). We compared these two groups to identify similarities and differences that may inform the use of policy instruments (e.g., voluntary, economic, and regulatory) in conservation program design. We interviewed 45 landholders participating in three different conservation agreement programs (price-based rate [property tax] rebate; market-based tender; and voluntary, permanent covenant). Production landholders were more likely to participate in short-term programs that offered large financial incentives that applied to <25% of their property. Nonproduction landholders were more likely to participate in long-term programs that were voluntary or offered small financial incentives that applied to >75% of their property. These results may be explained by significant differences in the personal circumstances of production and nonproduction landholders (income, education, health) and differences in their norms (beliefs about how an individual is expected to act) and attitudes. Knowledge of these differences may allow for development of conservation programs that better meet the needs of landholders and thus increase participation in conservation programs and retention of native vegetation.

Economic Potential of Agroforestry and Forestry in the Lower Mississippi Alluvial Valley with Incentive Programs and Carbon Payments

Abstract Conversion of bottomland hardwood forests in the Lower Mississippi Alluvial Valley (LMAV) to agricultural land has caused a loss of ecosystem services. The primary approaches to reverse this have been the Wetlands Reserve Program and the Conservation Reserve Program, which provide financial incentives to landowners to reforest. However, other forest production regimes and forestry financing mechanisms will be necessary to meet reforestation goals. Using capital budgeting techniques, we estimated financial returns from eight agroforestry and seven forestry systems to compare to returns from agriculture on marginal and average lands in the LMAV, as an indicator for potential adoption. In all but a few cases, agriculture had higher returns than agroforestry and forestry, even on marginal lands, and this is especially true when considering federal agricultural payments. We then estimated the break-even carbon net revenue per metric ton that would create a large enough financial incentive to favor forestry or agroforestry systems over agriculture. Given prospective moderate prices from carbon credits from afforestation and reforestation activities and high costs for implementing those activities, a few forestry and agroforestry systems might have potential on marginal agricultural land in the LMAV, subject to requirements such as providing evidence that reforestation would not have taken place without carbon payments. Regimes that maintain a large carbon stock on site by avoiding clearcutting performed better under carbon markets.

Whistle Blowing and CEO Compensation: The Qui Tam Statute

A purported dark side to powerful equity-based incentives is that they may induce a CEO to manipulate stock prices. With this in mind, recent theoretical models predict that firms will grant more equity-based compensation to their CEOs when the detection of any information manipulation is more likely. We provide confirming empirical evidence using three different tests. First, we use the qui tam statute as an experimental setting to test this prediction. This statute gives whistle blowers in the healthcare industry large financial incentives to reveal corporate fraud. Controlling for characteristics that might vary between the healthcare and other industries, we find that the proportion of equity-based compensation to total annual compensation is around 9% higher in the healthcare industry. Second, as third parties, such as the press, focus their investigative efforts towards large firms, we use an indicator variable to identify the largest firms in our sample and find that these firms are granted more equity-based compensation than others firms. Third, we use the passage of the Private Securities Litigation Reform Act (PSLRA) as an exogenous shock that increased the frequency of meritorious lawsuits. We find that equity-based compensation increased significantly after the passage of PSLRA. Using a difference-in-difference specification, we document that the effect of PSLRA on equity-based compensation is more pronounced for the healthcare industry and for the largest firms. The collective evidence appears consistent with theoretical models that predict that the detection likelihood of information manipulation affects the structure of CEO compensation.

Financial Misreporting and Executive Compensation: The Qui Tam Statute

A purported dark side to powerful equity-based incentives is that they may induce the manager to manipulate stock prices by distorting information. Recent theories predict that firms will grant more equity-based incentives to their managers when the detection of such information manipulation is more likely. We use the Qui Tam statute as an experimental setting to test this prediction. The Qui Tam statute gives whistle blowers in the healthcare industry large financial incentives to reveal corporate fraud, thus increasing the detection likelihood of information manipulation. Controlling for previously identified characteristics, we find that the extent of managerial equity-based incentives is around 9% higher in the healthcare industry than other industries. Further, as CFOs have the primary responsibility of the financial reporting process, we expect the effect of qui tam to be more pronounced for CFO incentives than for that of the other executives. Consistent with our prediction, we find that the healthcare industry’s effect on managerial incentives is the strongest for the CFO (13%), followed by the CEO (5%) and then by other executives. Using a difference-in-difference design, we find that the difference between CFO incentives and CEO incentives as well as the difference between CFO incentives and other executives’ incentives is larger in the healthcare industry than other industries. We also use the presence of a Big Five auditor as an alternate measure of the higher likelihood of detection of financial statement misrepresentation and find consistent evidence. Our collective evidence appears consistent with theories that predict that the detection likelihood of information manipulation affects the structure of executive compensation and in particular that of the CFO.

Editorial: Clinical trials in tropical diseases: a politically incorrect view

Few would disagree that the diseases which affect poor people in tropical countries are neglected, and more should be done to address this inequity. That means improving and deploying interventions which work, and developing new ones. Fortunately, there has been an upsurge in interest in neglected diseases, and a considerable increase in support for the development of new vaccines, drugs and methods of vector control. Clinical trials are essential to evaluate these new interventions, and also to improve existing ones. The standards increasingly demanded by funders and review committees are those of Good Clinical Practice, a rubric which has a little to do with good clinical practice, i.e. taking good care of patients, and a lot to do with documentation. I am not against the principles of good clinical practice, of course they are excellent, but I am concerned about the recommended practices and their blind adoption in poor settings. The mountains of paper and the burgeoning e-mail traffic, conference calls, committees, international air flights and meetings that characterize clinical research in the 21st century are supposed to ensure quality, and therefore facilitate progress. Whether all the procedural aspects and paperwork are truly necessary or even useful is a moot point. They are certainly very expensive and demanding. I fear that adoption of ‘industry standards’ in tropical medicine research will actually limit important post-registration research, particularly for groups with limited funds, will promote bad clinical practice by encouraging greater attention to the case record form than the patient, and that the ever-increasing bureaucratic burden will bury innovation and dissuade clinical investigators from entering this important field. ‘Industry standard’ good clinical practice does not ensure the research question is a good one, or the design of the trial is appropriate and I do not believe that it guarantees a better (i.e. more likely to be true) result. It has to be set against the impoverished reality of under-resourced and under-staffed health structures in countries which often have < US$10 per person per year to spend on all aspects of health. The usual trappings of a regulatory study, viz Contract Research Organizations (highly expensive commercial entities), Data and Safety Monitoring Committees, Trial Monitors (who are often part of the CRO, and usually pay more attention to the CRFs than the clinical procedures), may all do a good job, but they do not guarantee the probity of the trial, the appropriateness of the informed consent process, the quality of the clinical observations, or the accuracy of the result. More importantly, they do not guarantee that the patients or volunteers are well cared for. There may be an inverse correlation between the thickness of the case record form and the reliability of its contents. Is there really any need for a CRF to have more than 30 pages or weigh more than 1 kg? Try filling one in properly in a busy hospital ward or out-patients department at the end of a long day at an ambient temperature of 33°C and with humidity approaching 100%. Clinical researchers are being encouraged to be process rather than patient orientated. The case record form, rather than the patient, has become the focus of attention. Sometimes large financial incentives to investigators (remuneration per case studied as much as 50 times the average per capita income of the patient) encourage dishonest practices. The spiralling costs of such studies and the spiralling perceived requirements for committees make it difficult for small under-funded groups to conduct clinical research, thereby concentrating resources in large powerful established groups or consortia (often based in wealthier countries). Because Good Clinical Practice implies good clinical practice ethical review committees are increasingly insisting on these bureaucratic details, considering them to be an essential element of ethical conduct. Funding bodies often follow suit. Whilst the principles of good clinical practice to ensure that clinical research is correctly planned, supervised, recorded and reported are laudable, the increasing complexity and costs of the process imported from organizations and companies in rich countries may be unaffordable and unworkable in poorer countries. This increasing bureaucracy is not a necessary evil. It requires very careful appraisal and evaluation, and imaginative counter-measures. We need to distil the valuable essence of good clinical practice into something simple and workable, and concentrate on answering the really important questions in the simplest and most effective ways. Large, simple, low cost, high-quality clinical studies with sensible appropriate informed consent procedures and user-friendly case record forms are possible and should be encouraged. Funders should concentrate more on supporting infrastructural costs and clinical and laboratory training. More attention to clinical practice, more common sense, and less bureaucracy would serve our patients better, lead to better clinical research and faster improvements in the health of people living in tropical countries.

The Political Economy of Gubernatorial Smokestack Chasing: Bad Policy and Bad Politics?

AbstractWhy do states persist in offering large financial incentives to induce firms to relocate to or expand in the state, a practice commonly derided as “smokestack chasing?” The conventional wisdom is that while these incentives have little effect on firms' business decisions in the long term, they are a good political strategy for governors seeking to improve economic conditions and political support in the short term. I test these hypotheses by examining the economic and electoral impact of industrial recruitment policies in Wisconsin, Virginia, Michigan, North Carolina, Maryland, Indiana, and Kentucky. I find, first, that these policies pay immediate dividends for governors by increasing county-level job growth and per capita income prior to the next election. Second, governors recruit firms strategically to relocate to counties that opposed them in the previous election. But, third, this industrial recruitment does not increase electoral support for the governor. In fact, the more success a governor has in recruiting firms or jobs to a county, the fewer votes he or she receives in it in the next election.

The Impact of Cereal Prices and Policy on Crop Rotations and Supply Response

The impact of cereal prices on rotational decisions and farm‐level and industry cereal supply is considered. It is argued that with the voluntary 50 per cent set‐aside option for cereal producers, there is a large financial incentive to adopt a 50 per cent set‐aside cropping plan as cereal prices fall below an individual producer's ‘indifference’price. For a typical 210‐hectare UK combinable crop farm, adopting a 50 per cent set‐aside cropping plan is optimal when the price of cereals is below £62/tonne (98.50/tonne). If widely adopted, 50 per cent set‐aside will lead to a substantial fall in the supply of cereals and would lead the industry supply curve for cereals to move leftward and become more elastic over a certain price range. The level of reduced cereal supply will be greater than would be predicted from an estimate of industry level supply response that ignored rotational and farm‐level financial incentives.

A re‐examination of probability matching and rational choice

AbstractIn a typical probability learning task participants are presented with a repeated choice between two response alternatives, one of which has a higher payoff probability than the other. Rational choice theory requires that participants should eventually allocate all their responses to the high‐payoff alternative, but previous research has found that people fail to maximize their payoffs. Instead, it is commonly observed that people match their response probabilities to the payoff probabilities. We report three experiments on this choice anomaly using a simple probability learning task in which participants were provided with (i) large financial incentives, (ii) meaningful and regular feedback, and (iii) extensive training. In each experiment large proportions of participants adopted the optimal response strategy and all three of the factors mentioned above contributed to this. The results are supportive of rational choice theory. Copyright © 2002 John Wiley &amp; Sons, Ltd.

Egg donation — The donor's view: An aid to future recruitment

The major stumbling block for egg donation lies in the recruitment of sufficient suitable donors. This study ascertained the views of egg donors in the UK by analysing 113 completed questionnaires that asked questions about demographics, stimulus to donate, support network available, ethics, the ‘process˚s of donation and payment. Ideas for future recruitment were also sought. The mean age of donors was 31.7 years, and most donors were donating for the first time. Ninety-one per cent of donors were Caucasian and 93% had children of their own. Ninety-six (85%) donors felt fully supported in their decision to become an egg donor and 60 (53%) discussed their donation with their GP. Information regarding egg donation came from many sources. The main motivation to donate was a desire to help childless couples. Many respondents had themselves suffered, or knew of couples with, infertility. Eighty-three (73.5%) respondents felt that expenses alone should be paid to egg donors, and many expressed concerns that large financial incentives may attract the ‘wrong women˚s to donate. Forty-nine (43%) respondents found the procedure painful or stressful in some way, although 95% had no regrets concerning their donation, and 72% would donate again. A common reason for donors not wishing to donate again was age restriction. Respondents were asked their opinion with regard to recruitment and the enthusiasm they expressed needs to be harnessed if the current shortcomings in available donors are to be overcome. Specific recommendations to achieve this are made.

Impacts of changing relative prices on farm level dairy production in the UK

This paper presents a linear programming model designed to evaluate the impact of changes in milk to milk-quota-leasing price ratios, nitrogen fertiliser and concentrate prices on the profitability of a technically efficient UK dairy farm. The model incorporates energy and protein requirements of cows of different yield levels and allows substitution between forage and concentrate feeds. The results show that there is a large financial incentive to reduce input levels and move to lower yielding cows as milk to milk-quota-leasing price ratios fall relative to prices for concentrates and nitrogen fertiliser. However, under proposed reforms to the Common Agricultural Policy, and at current UK milk prices, technically efficient producers will find it profitable to continue feeding relatively large amounts of concentrates to relatively high yielding cows.

EEG, physiology, and task-related mood fail to resolve across 31 days of smoking abstinence: Relations to depressive traits, nicotine exposure, and dependence.

Changes in task-related mood and physiology associated with 31 days of smoking abstinence were assessed in smokers, 34 of whom were randomly assigned to a quit group and 22 to a continuing-to-smoke control group. A large financial incentive for smoking abstinence resulted in very low participant attrition. Individuals were tested during prequit baselines and at 3, 10, 17, and 31 days of abstinence. Abstinence was associated with decreases in heart rate and serum cortisol, a slowing of electroencephalogram (EEG) activity, and task-dependent and trait-depression-dependent hemispheric EEG asymmetries. Differences between the quit group and the smoking group showed no tendency to resolve across the 31 days of abstinence. Trait depression and neuroticism correlated with increases in left-relative-to-right frontal EEG slow-wave (low alpha) activity at both 3 and 31 days of abstinence. In contrast, prequit nicotine intake and Fagerström Tolerance scores correlated with alpha asymmetry and with greater EEG slowing only at Day 3. Thus, the effects of smoking abstinence appear to last for at least several months.