Promoting Recycling: Incentive Based Approaches and

Behavioral ResponsesJohn Thøgersen

Aarhus University, School of Business and Social Sciences

Denmark

Keep America Beautiful’s Fall Recycling Symposium: Re: Psychology, Making Recycling Second Nature

Economic instruments – waste

and recycling1. Waste taxes 2. Waste collection charges 3. Taxes on raw materials and products 4. Deposit-refund schemes 5. Subsidies and fiscal incentives

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Source: Oosterhuis et al. (2009).

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The rationale• Too much waste is generated and too little

recycled because relative prices are not reflective of total social costs – “Perverse subsidies” (Holliday & Pepper, 2001)

favor wasteful practices

• Change the relative costs and benefits of disposal/waste avoidance/recycling behaviors in order to make it more profitable for the individual to act in accordance with the collective interest

Relationship between waste generation and

waste policies

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4Source: OECD (2011).

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Themes

• Intended and non-intended effects of economic incentives

• Economic incentives and motivation “crowding out”

• Case: A pay-by-weight scheme for household waste

Intended and non-intended effects of

economic incentives

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The development in the number of plastic bags,

Denmark

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Source: http://www.plast.dk.

Household waste in Varberg, Sweden

Note: Pay-by-weight scheme introduced in 1995. (1997 estimate based on first 6 mo.)

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Motivation “crowding out”

• Price incentives, being externally controlling, may undermine intrinsic motivation– Reduced feeling of self-determination and/or

competence leads to a shift from an internal to an external locus of causality

– Over-justification• a person’s own interest in the behaviour is discounted

when he or she is given an extrinsic reason for doing something they would have done anyway

(Lepper & Greene, 1978)

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Standard economic model

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Crowding out with a negative net effect

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(Frey & Oberholzer-Gee, 1997)

%

Motivation crowding out among voters in

Switzerland• A “referendum”

about accepting a nuclear waste repository in one’s community

• Some offered compensation, others not

• Compensation offered: $2,175 - $6,525 per individual and year

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Volunteers collecting money

for a cause• Volunteer collectors: 180 pupils divided into three groups– 1: Motivation speech– 2: Motivation speech and 1% of collection– 3: Motivation speech and 10% of collection

• Who collected the most money?– Group 1: Highest intrinsic motivation

• Who collected the least money?– Group 2: Crowding-out of intrinsic motivation

• Conclusion: Pay enough or don’t pay at all!

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14(Weibel et al., 2007)

Effects of tangible awards on work

performance• Meta-analysis based on 51

studies/155 subgroups (n = 46.363)

• Experimental studies which a) address the effect of incentives on task performance, b) report “hard” performance measures, c) manipulate tangible incentives on an individual level, d) have a control group

• Effects on extrinsically motivated tasks = .42

• Effects on intrinsically motivated tasks = -.13

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Norms and pro-social behavior

• Internalized extrinsic motivation• Prescriptive norms not necessarily

internalized– Subjective vs. Personal norms

• If a monetary incentive to promote environmentally desirable behavior renders (internalized) personal norms irrelevant due to overjustification, the behavioral impact of the regulation could be severely reduced

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Can regulation enhance internalized

motivation?• If it increases targeted individuals’

perceived competence and/or their experienced autonomy with regard to the desired behavior

• If it creates or strengthens social and perhaps even personal norms regarding the promoted behavior – Regulation signals a social norm– Also more specific signals, e.g. about the

severity of the targeted problem and the individual’s responsibility for solving the problem

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Norms and pro-social behavior

• Internalized extrinsic motivation• Prescriptive norms not necessarily

internalized– Subjective vs. Personal norms

• If a monetary incentive to promote environmentally desirable behavior renders (internalized) personal norms irrelevant due to overjustification, the behavioral impact of the regulation could be severely reduced

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Hypotheses• If an economic incentive is offered, rewarded behavior

becomes more and punished behavior less prevalent (the price-effect)

• If an economic incentive is offered to promote a previously internally motivated behavior, the internalized motivation is undermined

• An economic incentive may enhance internalized motivation by strengthening perceived competence (self-efficacy) with regard to the desired behavior

• If an economic incentive scheme is introduced, pre-existing injunctive norms about the behavior are reinforced

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Data

• Postal survey, random sample, collected in 2000– Response rate 41% – 1955 respondents

• From matched groups of municipalities – 3 w. and 3 w.o. pay-by-weight

scheme for garbage collection– Residents in home w. garden(Thøgersen, 2003)

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Measures• Municipality group (w./w.o. pay-by-weight scheme)

• Knowledge of the type of garbage collection fee (1 item)

• Self-reported recycling behavior (3 items material recycling, 2 items composting)

• Opportunities for material recycling (1 item)

• Opportunities for composting (1 item)

• Personal norms (2 items material recycling, 2 items composting)

• Perceived self-efficacy (6 items material recycling, 2 items composting)

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Data analysis method

• Structural equation modeling– possible to calculate measurement error

when a latent variable of interest is represented by multiple manifest variables

• Full Information Maximum Likelihood– Most efficient method to deal with missing

values because it minimizes the loss of information and, hence, statistical power, and leads to the most unbiased parameter estimates even with nonnormal data

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Pay-by-weight and waste handling: Composting and

material recyclingN = 1955

1 The model is saturated

(Thøgersen, 2003)

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Difference in material recycling

kg/ household/year

(Thøgersen, 2003)

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Source-separation

R2 = .73; CFI = 1.00

(Know the)Pay-by-weight

system

.17Self-efficacy

.16

OwnComposter

.37

.32

PN(Obligation) .35

.78

.60

.66

.28

.33

(Thøgersen, 2003)

Pay-by-weight, motivation and

source-separation

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Conclusions• Under realistic and not uncommon conditions the non-

economic motivational impacts of a (small) economic incentive can boost its effect on behavior over and above that of the direct price-effect– Households in municipalities with a pay-by-weight

scheme deliver more of their recyclable materials to recycling and compost more of their fruit and vegetable waste in the garden

– A large proportion – perhaps most – of the behavioral outcome cannot be attributed to a simple price-effect

– A substantial share of the effect of the incentive scheme is mediated through perceived self-efficacy and personal norms

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Conclusions• Under realistic and not uncommon conditions the

non-economic motivational impacts of a (small) economic incentive can boost its effect on behavior over and above that of the direct price-effect– Households in municipalities with a pay-by-weight scheme

deliver more of their recyclable materials to recycling and compost more of their fruit and vegetable waste in the garden

– A large proportion – perhaps most – of the behavioral outcome cannot be attributed to a simple price-effect

– A substantial share of the effect of the incentive scheme is mediated through perceived self-efficacy and personal norms

Unintended side-effects

• Increased private burning of waste• Increased waste dumped in public

waste-receptors• Illegal dumping• Increased administrative costs

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Wrap up• Prices often deviate from total social costs in a way

that favours non-sustainable consumption• Consumers are often sensitive to prices• There is a risk that the use of price incentives

undermines intrinsic motivation• But this is only an issue in non-market contexts

and where intrinsic motivation is an important factor

• A small performance-dependent price incentive may even strengthen personal norms in some cases

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Questions?

??

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Additional reading for the involved

• Thøgersen, J. (2003). Monetary incentives and recycling: Behavioral and psychological reactions to a performance-dependent garbage fee. Journal of Consumer Policy, 26, 197-228.

• Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15, 589-611.

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Pay-by-weight and waste handling: Composting and

material recyclingN = 1955

2 Unique (error) variances of items referring to the same material fraction are allowed to correlate

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Correlations between the independent

variables

Note: Composting in upper and material recycling in lower triangle.

1 p > .05. In all other cases, p < .05.

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Reddy (1991)

• In the USA, for example, '... the rate-making process has the following unintended, but nevertheless perverse, incentives': 1. Electricity profits increase with every

additional kWh sold; 2. Electricity profits decrease with every

additional kWh saved