Academic journal article Economic Inquiry

Motivation Crowding in Real Consumption Decisions: Who Is Messing with My Groceries?

Academic journal article Economic Inquiry

Motivation Crowding in Real Consumption Decisions: Who Is Messing with My Groceries?

Article excerpt

I. INTRODUCTION

Intrinsic motivation, the desire to perform a task or contribute to a public good for its own sake rather than out of narrow material interests, has been found important in the private provision of public goods, for example, in the form of charitable giving, volunteering, and many other contexts. (1) There is also substantial evidence that intrinsic motivation interacts with regulatory interventions in the form of monetary rewards, fines, or minimum contributions, either positively (crowding in) or more commonly negatively (crowding out). (2) Crowding effects have been observed either when moving from a nonmarket to a market situation, (3) or in principal-agent settings. (4) The latter does not involve provision of a public good but of effort that benefits the principal at a cost to the agent. Whether motivation crowding exists within purely market contexts has been controversial (Ariely, Bracha, and Meier 2009; Fehr and Falk 2002) but has remained an untested hypothesis. However, its presence can interfere with the effectiveness of regulatory interventions intended to stimulate pro-social behavior, making this issue relevant for both researchers and policymakers.

We provide the first experimental evidence of motivation crowding in real purchasing decisions. (5) Using food purchases of more than 500 customers at a leading UK supermarket, we compare the impact of different regulatory interventions on grocery choices. Climate change mitigation, in the form of a product's carbon footprint, serves as the public good. For the intrinsic motivation to privately contribute to its provision to be behaviorally relevant (or "activated") in a particular context requires information about the public good dimension of available choices. In this experiment we choose the impure public good context of grocery shopping (cola, milk, meat, and butter/margarine) with products differing in their lifecycle carbon footprints.

Crowding out occurs if an explicit regulatory intervention reduces the willingness of an individual to buy a "clean" product compared to an equivalent change in incentives without an explicitly interventionist character. (6) For marketed goods prices change as a matter of routine and a small change in price would not give rise to crowding effects in the absence of information on how it came about. Crowding out, however, may occur when a government deliberately alters the incentive system of consumers. Explicit interventions are a key component of most crowding theories.

We analyze how consumers respond to such government interventions within the marketplace. Our experimental treatments focus on the context of otherwise equivalent changes in prices. The context for changes in prices is important for two reasons. The first is the information transmitted on the intervention, which might trigger a strategic response by consumers (Benabou and Tirole 2003; Ellingsen and Johannesson 2008; Sliwka 2007). The second reason is a pure "framing effect." Knowing that a change in price is caused by a deliberate intervention might trigger psychological mechanisms such as over-justification (tangible extrinsic motivation crowds out intangible intrinsic motivation), (7) or a reduction in perceived self-determination (deliberate interference by a third party reduces an individuals' autonomy which in turn reduces its intrinsic motivation, see Deci and Ryan 1985).

We are not the first to investigate how context affects responses to changes in prices or choice sets. Kahneman, Knetsch, and Thaler (1986) use survey data on the perception of price changes and do not refer to intrinsic motivation. Eckel and Grossman (2003) compare two functionally equivalent subsidy schemes for charitable giving, both are explicit interventions. Kallbekken, Kroll, and Cherry (2011) provide experimental evidence that acceptance of a Pigouvian tax is reduced when it is called "tax" rather than a "fee." Falk and Kosfeld (2006) and Schnedler and Vadovic (2011) investigate crowding effects in a principal-agent model where the principal can restrict the agent's choice set. …

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