paying for performance

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).

Another theoretical approach, selfdetermination 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

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Box 5.2 continued

or sources of health care provider motivation. Further, simply assuming that rational individuals would respond to monetary rewards ignores the complexity of the health systems within which health care providers and managers work. Several studies provide evidence of health workers expressing intrinsic motivation, suggesting that ignoring it may provide an incomplete understanding of the effect of PBF on overall health worker motivation (Kalk, Paul, and Grabosch 2010; Olasfsdottir, Bakhtiari, and Barman 2014).

(Lohmann et al. 2018). Lohmann et al. (2018, table 3) find that the Malawian Results-Based Financing for Maternal and Newborn Health Initiative motivated health workers to improve their performance by “triggering a sense of accomplishment,” “altering social dynamics by creating a sense of common goals,” and “providing direction and goals to work toward,” among other positive changes. In Burundi, health workers found that PBF reinforced feelings of professionalism (Bertone and Meessen 2013). In Rwanda, health workers reported greater appreciation of their work, greater attention to their work by managers, and increased feelings of responsibility (Kalk, Paul, and Grabosch 2010). In Mali, Zitti et al. (2019) find that PBF led health workers to feel more motivated to perform their tasks—this was not driven by financial rewards but by PBF allowing them to work more efficiently. All these studies point toward different sources of motivation beyond those driven by monetary rewards, which are often just one component of PBF interventions.

Frey and Jegen (2001) incorporate two main psychological processes through which external interventions may affect intrinsic motivation into economic thinking that enable unpacking “intrinsic motivation crowdingout” in the context of PBF interventions. These are (1) impaired selfdetermination and (2) impaired self-esteem. External interventions such as PBF may impair self-determination if individuals feel compelled to behave in a specific way by an external intervention. In this case, intrinsic motivation is substituted by extrinsic motivation. Additionally, external interventions may also impair self-esteem when an individual feels their involvement is not appreciated. Intrinsically motivated persons may reduce effort when a monetary reward is offered because they are deprived of the chance to display their interest and involvement. Given these two

processes, Frey and Jegen (2001) theorize that external interventions such as PBF may crowd out intrinsic motivation if individuals perceive them to be controlling and may crowd in intrinsic motivation if individuals perceive them to be supportive.

While the phenomenon of “intrinsic motivation crowding-out” has been confirmed by studies in behavioral economics and social psychology, these are largely confined to high-income contexts or those involving the introduction of payments to hitherto non-incentivized tasks such as blood donation (Lohmann, Houlfort, and De Allegri 2016; Gneezy and Rustichini 2000; Ariely, Bracha, and Meier 2009; Deci, Koestner, and Ryan 1999). To date, beyond a few studies, there is little and inconclusive evidence on this issue in the context of health systems in LMICs (Binyaruka, Lohmann, and De Allegri 2020). One exception is the Malawian PBF pilot whose effect on intrinsic health worker motivation has been studied by Lohmann et al. (2018). The authors report that PBF did not affect health workers’ intrinsic motivation levels. Shen et al. (2017) also find similar results in Zambia. There is a need for a larger number of field experiments that study this phenomenon in the context of payments to health workers (Renmans et al. 2016).

Beyond the study of “intrinsic motivation crowding-out,” there is at best mixed evidence that paying health workers for performance improves health worker motivation in low-income settings. A systematic review of 35 peer-reviewed articles (Renmans et al. 2016) points toward contradictory findings from evaluations and calls for more research on the influence of the context and design of PBF schemes. Further, considering that PBF intervention packages often consist of many elements in addition to financial incentives, it has been difficult to disentangle the effects of pure incentives from increased autonomy (Ireland, Paul, and Dujardin 2011; Lohmann et al. 2018). Renmans et al. (2017) argue that viewing PBF exclusively as a payment-related incentive is inadequate and the different aspects and implications of the broad PBF package should be explained to unpack the effects on worker motivation. Binyaruka, Lohmann, and De Allegri (2020) emphasize the need to assess how PBF works across settings as well as within settings, by studying the heterogeneous effects of PBF on different cadres of health workers and health facilities.

Against this background, the rest of this section presents experimental evidence (from five randomized controlled trials and one nonrandomized controlled trial experiment) of the impact of PBF on health worker motivation, satisfaction, and well-being in four countries in Sub-Saharan Africa