Behavioural economics: Why not shift focus to right doers?

By XN Iraki | Published Tue, January 9th 2018 at 10:21, Updated January 9th 2018 at 10:24 GMT +3
Two ladies cross a road in Kigali, Rwanda. What incentives do we give to good drivers and good behaviour in general? [XN Iraki]

The media reported that our courts made Sh1.125 billion in fines.  One would wish we also get an accurate amount that went to police and other officials as bribes. 

That was a decline from the previous year. The NTSA is busy making tougher rules for drivers to reduce road carnage. KNEC has been doing the same over exams.  Everywhere punishment is getting tougher, except a reprieve for death penalty.

In the workplace, lots of workers live in fear of being punished or dismissed. In our homes kids live in fear of being punished by parents. Most religions talks of punishment in afterlife. We all can recall punishments in school particularly before the advent of 8-4-4 system. 

Why do we focus so much on punishment to achieve our socio-economic objectives? Why not rewards?  The focus on punishment might have shed a few percentage points in our GDP growth.

Focus on punishment leads to misallocation of resources and sub-optimal performance of the economy. Think of resources you use to punish the wrong doers. Suppose they were shifted to the right doers to make them more productive? There are millions of Kenyans who keep the law and have never been convicted. Who has ever thanked them for ensuring that national resources are put into the best use?

Incentives do not have to be money back, even kind words can do wonders. By the way, why doesn’t insurance reward me if I don’t cause accidents with some money back?

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Policemen will stop you for making a wrong turn, speeding or other traffic offenses. Why don’t they stop those driving at moderate speed just to thank them?  Fear of punishment forces good drivers to drive slowly, wasting time and negating the purpose of inventing the car.

In the work place, fear of punishment kills innovation. Most people want to toe the line to keep their jobs. Does that explain why our firms rarely grow big into multinational corporations?

Fear of punishment also keeps our classrooms dull.

Let us give credit where it is due; the private sector has tried to incentivise performance and good behaviour with employee of the month or year awards.  The public sector is catching up. Has “Performance Rewards and Sanctions Framework for the Public Service” dated May 2016 been implemented?

In other countries, incentives work alongside punishment. Let me share a few examples from my experience which should not be construed as a show off.

Speeding

A policeman once stopped me in Florida for speeding on I-10 near Pensacola. The first question he asked me was, “Where are you going?” I answered, “Boca Raton.” “I don’t think you will get there “, the policeman quipped. Why, Sir? I asked.  The police man added” You will be dead”. I did not know policemen can be humorous.  I slowed down and arrived in Boca Raton after another 10-hour drive.

In Louisiana, I was charged $216 (Sh22,248) for exceeding the speed limit by eight miles. It is no wonder Louisiana is poorer than Florida. The policeman in Florida treated me kindly because he knew tourism is their key industry. He wanted me to return. And I did, every summer, sunbathing in Florida’s beautiful beaches in subtropical weather. Does the police training curriculum contain any unit on economics?

In New York City I drove through a toll station to Long Island without paying;   that lane was for those who pay in advance. An electronic tag on the car does the magic. My rented car had none.  One week later, I got a letter from New York. I was to pay $21 fine. But there was an incentive - if I paid within three weeks, it would reduce to $18. I was given the payment options from using money order to debit card. I could even contest in court. I promptly paid.

The last example: I was summoned to court over an expired insurance cover in Jackson, Mississippi. The judge asked me if I had insured my car at that particular time. I answered affirmatively and showed my cover. I was told to go home.

The other week, a policeman stopped me in Westlands for making a wrong turn.  He was hidden up the hill directly opposite Mayfair Hotel and watching from a distance. I did not deny. I told him there was no way I could tell a lie just a few days to Christmas. He laughed and told me to go. 

The focus on suffering or punishment in Kenya, and maybe Africa, has perplexed me and may be something to think about. This has made life very difficult, making us live in the shadow of fear. Most Kenyans have a story to tell about the punishment they have encountered in their life, some physical, others emotional.

After focusing on punishment for 54 years, why not shift to incentives, and rewards.  We are not calling for the end of punishment, but it must be balanced with rewards.  Unfortunately, there seems to be a belief that incentives do not work in Kenya and will be abused. Have we tried? That might change the economic fortunes of this country.  Why not make 2018 the year of incentives and rewards? 

The writer teaches at the University of Nairobi

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