Should you pay people to change behaviour?

Paying people to change behaviour doesn’t always work.

When trying to ban single use plastic bags from supermarkets, for example, a popular suggestion is to reward people for using reusable bags.

A less popular suggestion is to penalise those who don’t.

Well, here’s what behavioural research tells us.

In a study across 16,000 US shoppers, when people were paid a 5c BONUS for reusable bags, it did NOTHING to change behaviour.

When shoppers were hit with a 5c PENALTY, use of plastic bags dropped from 82% to 40%.

This tells us that not everything is equal.

Getting rewarded with 5c for doing the right thing isn’t the same as avoiding a 5c penalty if you don’t.

Penalties, taxes, hit harder because they are a LOSS. 

And losses are more powerful than potential gains.

Does that mean you should always penalise undesirable behaviour? No.

Does it mean you should never pay for desirable behaviour? No.

👉👉 It does mean you have to question whether 'easy' solutions like throwing money at people will be the most effective way to influence outcomes.