Motivating Prosocial Behavior: Economic Incentives and Moral Constraints

Many social and public goods are provided through the performance of volunteer activities, such as donating blood or organs, cleaning beaches, assisting the elderly or working in soup kitchens. These activities represent an important aspect of the operating of a society, but in many cases supply still falls short of demand. Although the provision of economic incentives (or even the creation of markets) for these activities might in principle alleviate or eliminate the shortage, there is strong opposition to the use of these "standard" economic tools for the promotion of prosocial activities. The aversion is based on three key motives: first, material incentives might not attract the "best" or most motivated individuals; second, incentives may "crowd out" intrinsic motivations, thus leading to a reduction in the provision of these activities; and third, compensation for certain activities, such as donating blood or organs, is considered morally repugnant in most societies.

In a series of three CES Lectures, Nicola Lacetera will discuss the economics, psychology and ethics of incentives for prosocial behaviour. The emphasis will be on empirical studies that have addressed these topics, on the methodological challenges in performing empirical analyses of the subjects and on the importance of a continuous dialogue among different disciplines for a full understanding on whether and how markets and incentives can help alleviate the shortage of certain prosocial activities.

Mr Lacetera is an applied economist with a number of research interests. First, he has collaborated with several non-profit organisations to conduct field experiments to study the motivations for altruistic behaviour, and in particular blood and organ donations, thus informing these organisations on how to enhance contributions from donors. A second line of research concerns how ethical beliefs affect the acceptance of certain "controversial" transactions (such as paying for blood or organs, patenting living organisms or prostitution). Third, he uses large datasets from used-car auctions to assess the determinants of value and quality of automobile. Finally, he studies how different individual motivations and institutional arrangements affect the production and commercialisation of knowledge.

Nicola Lacetera joined the University of Toronto in 2010 as an Associate Professor in the Department of Management after four years as Assistant Professor of Economics at the Weatherhead School of Management of Case Western Reserve University (Cleveland, Ohio). While at Case Western, he taught courses in Entrepreneurship and Business Strategy at both the graduate and undergraduate level. He holds a PhD in Strategy from the Massachusetts Institute of Technology and a BA in Economics from Bocconi University in Milano, Italy.