P erformance - B ased F inancing I mproves C overage
Box 5.2 In Focus: Theoretical underpinnings of health worker motivation and paying for performance The idea that rewards—and, specifically, monetary rewards—may undermine and crowd out intrinsic motivation is usually traced back to Richard Morris Titmuss’s seminal book, The Gift Relationship. In it, he argues, comparing blood donation systems in the United States and the United Kingdom, that paying for blood undermines the inherent social value of altruism and thereby reduces or totally eliminates the willingness to donate blood (Frey and Jegen 2001; Titmuss 1970). In his book, Titmuss argues that paying for blood leads to not only “worse blood,” but also “less blood.” Another strand of literature where this idea has been identified and studied is cognitive social psychology, where under the theoretical umbrella of cognitive evaluation theory, intrinsically and extrinsically motivated behaviors are clearly identified and distinguished. Deci (1972, 217) summarizes intrinsic motivation as “perform[ing] an activity for no apparent reward except for the activity itself ” and extrinsic motivation as the performance of an activity because it leads to external rewards. An expanded definition of intrinsic motivation includes motivation that stems from the opinion of one’s peers (Leonard and Masatu 2017). Many studies discuss the link between prosocial motivation, which is derived from the opinion of peers or even the community, and interventions that track and share data on performance. Generally, these studies find that tracking performance and providing feedback on it, as done by performance-based financing (PBF) programs, can at least in theory improve performance for pro-socially motivated workers (Peabody et al. 2014; Malin et al. 2015). A n o t h e r t h e o re t i c a l a p p ro a c h , s e l f - determination theory, explicitly recognizes the importance of a multidimensional approach to
motivation (Deci and Ryan 1985; Lohmann, Houlfort, and De Allegri 2016; Borghi et al. 2018). It places motivation on a continuum where individuals engage in tasks because they find them interesting, enjoyable, or challenging (intrinsic motivation) on one extreme or for purely instrumental reasons, such as rewards or punishment, on the other (extrinsic motivation or external regulation). Between these two extremes, there are different types of extrinsic motivation that may be driven by a combination of internal and external factors. When motivation is driven by external factors (that is, driven by rewards, punishment, or performance), it is called controlled. When motivation is caused by internal factors (that is, driven by interest and enjoyment in the task itself ), it is called autonomous (Lohmann, Houlfort, and De Allegri 2016). In contrast, standard economic theory does not normally differentiate between different sources of motivation. Economic thinking typically assumes intrinsic motivation to be a constant and theorizes extrinsic motivation—which responds to monetary incentives. In standard principal-agent models, PBF rewards raise performance by imposing a higher marginal cost of shirking or increasing the marginal benefit of working, thereby increasing total motivation. Therefore, by treating motivation as a unidimensional measure, an overall measure, or simply additive, standard principal-agent models ignore intrinsic motivation (Lohmann, Houlfort, and De Allegri 2016; Himmelstein, Ariely, and Woolhandler 2014; Renmans et al. 2016). Given that the underlying logic of PBF schemes is based on economic theory, Himmelstein, Ariely, and Woolhandler (2014) point out that PBF schemes assume that financial incentives will increase total motivation by failing to distinguish between the different types (Continued)
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