Abstract from Professor Glenn Boyle's Guest Lecture presented at the Treasury on 06 March 2007.
Professor Glenn Boyle
NZ Institute for the Study of Competition and Regulation, Victoria University of Wellington
Glenn Boyle is executive director of the NZ Institute for the Study of Competition and Regulation and professor of finance at Victoria University of Wellington. and professor of finance at Victoria University of Wellington.
Economists take it as axiomatic that people respond to financial incentives. In employment relationships, for example, greater pay should attract higher quality workers and more performance-related pay should induce greater effort on the part of all workers. Others, particularly psychologists and sociologists, sometimes disagree, maintaining that workers are frequently motivated primarily by more intrinsic factors. Privacy and other constraints on data mean that there is little empirical (as opposed to laboratory) evidence on this issue, particularly as it relates to 'professional' or 'expert' workers. This talk will outline four recent studies (three using NZ data) that illustrate the power of financial incentives to motivate experts in both positive and negative ways.