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Posts Tagged ‘incentives’

I’m currently reading a book called “Confessions of a GP” by Dr Benjamin Daniels (pseudonym of course) which, amongst anecdotes about the people that he sees in his surgery, gives an interesting insight into the NHS, including the targets system (named the Quality and Outcomes Framework).

As economists we find incentives/disincentives very interesting, particularly how they can have ‘perverse’ (unintended negative) effects as well as their intended effects. I think Dr Daniels gives a very good overview of the way the NHS incentives have affected the individual behaviour of GPs and practices but also the NHS in general.

Daniels starts off a chapter (‘Targets’) with his practice manager suggesting, as Daniels pops out to see an elderly patient that has fallen over, that he diagnose her with a stroke, then goes on to explain how nobody in the surgery’s area has had a stroke in the last nine months. Absence of stroke is great for the health of the patients, but means less money for the surgery, as the surgery will not have hit its ‘stroke target’!

He then explains that these targets can be a good thing, pointing out the example that strokes have been poorly managed for years, but with the right treatment after a stroke or mini stroke, the chance of having another stroke can be significantly reduced. So the targets work by giving doctors the incentive to check a patient thoroughly for signs of a stroke and to send them to a specialist if they do find signs.

He does also point out the perverse incentive side – that these targets can tempt GPs to wrongly diagnose a stroke in order to achieve their targets and therefore earn more money – but he also says that in the ‘vast majority’ of practices that he has worked in the doctors have been incredibly honest in achieving their targets. This sounds reassuring at first glance but then makes me fear about the minority!

In a later chapter (‘Money’) Dr Daniels also talks about how the targets and incentives have affected the NHS overall – prior to the introduction of the targets the NHS was facing a huge loss of GPs to overseas jobs and early retirement, due in part to low pay. As it takes over ten years to train a GP, this meant that the NHS would have faced a severe shortage of GPs.  A pay rise and better working hours were introduced together with the targets/incentives, all of which Daniels attributes to saving the NHS from a large loss of GPs as well as increasing the efficiency of the NHS. Daniels points out that surgeries are privately run and motivated GPs will set up new services to reach new targets and therefore earn more money.  On the flip side of this, the way that people in different classes of society deal with their health and medical problems mean that surgeries in deprived areas have a lot of trouble hitting their targets as patients are less likely to take their medication or attend appointments. This in turn can lead to trouble attracting enthusiastic and dedicated doctors in these areas where often they are needed most.

In policy making in the environmental sector we rely very heavily on incentives and attempt to work out what the unintended consequences of these incentives can be and how to reduce them. This is why you’ll find endless discussions about environmental economics influenced policies such as cap and trade and fishing quotas!

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If you want to find out more about the Quality and Outcomes Framework and see what targets your surgery is hitting, click here.

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Throwing litter into bins rather than onto the street, using the stairs rather than the elevator, and recycling glass rather than throwing it away are all beneficial behaviours to ourselves and society at large.  However, a lot of the time people don’t carry out these positive behaviours, opting instead for the more negative alternatives.  Litter ends up on the street, people opt for the elevator rather than taking stairs, and glass gets thrown away in regular rubbish bins, if it even makes it to a bin.

 Economists carry out a lot of work on getting people to change behaviour and getting the incentives right to encourage behavioural change.  The Fun Theory website promotes what they call, well, the fun theory, which they describe as:

 “…something as simple as fun is the easiest way to change people’s behaviour for the better.”

 The website currently displays videos of three different projects carried out by the TheFunTheory.com that have incorporated fun into the three behaviour changes described above.  Unsurprisingly, the end results are very encouraging, with a ‘fun’ bin collecting 72kg of rubbish in a day, more than double of a nearby bin collecting 31kg of rubbish, the ‘fun’ stairs encouraging 66% more people than usual to choose the stairs rather than the elevator, and the ‘fun’ bottle bank being used by nearly 100 people, while a nearby conventional bottle bank was used just twice.

Of course there are the usual caveats, with the numbers from the nearby rubbish bin and bottle bank suffering from displacement activity as people chose to deposit their rubbish and glass into the ‘fun’ alternatives (I can also imagine some people running home for their empty bottles they were saving to bulk dump for another day to try out the ‘fun’ bottle bank that evening), and the expected lower numbers of users once the novelty runs out. 

Despite the disclaimers however, the theory is still intriguing, with ‘fun’ being used here as an economic factor to incentivise behavioural change.  It’d be interesting to test out the numbers against more conventional incentives such as offering people a small amount of money instead.  For example, if offering people 5p per bottle deposited at the bottle bank achieves the same bottle deposit results as we’ve seen at thefuntheory, this will give a lower bound estimate of the value of thefuntheory invention (the estimate is a lower bound because while the bottle deposits are accounted for, the ‘hidden benefit’ of the social interaction between the various users and bystanders is not accounted for).

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