Perverse incentive

Last updated

A perverse incentive is an incentive that has an unintended and undesirable result that is contrary to the intentions of its designers. Perverse incentives are a type of negative unintended consequence. A classic example of a perverse incentive occurred when the British government offered a bounty for dead cobras with the intent of decreasing the wild cobra population. However, enterprising people began to breed cobras for the income. When the government became aware of this, the reward program was scrapped, causing the cobra breeders to set the now-worthless snakes free. As a result, the wild cobra population further increased. The term cobra effect was coined to describe a situation where an attempted solution to a problem actually makes the problem worse. [1] [2]

Contents

Examples

See also

Related Research Articles

Unintended consequences Outcomes of a purposeful action that are not intended or foreseen

In the social sciences, unintended consequences are outcomes of a purposeful action that are not intended or foreseen. The term was popularised in the twentieth century by American sociologist Robert K. Merton.

A subsidy or government incentive is a form of financial aid or support extended to an economic sector generally with the aim of promoting economic and social policy. Although commonly extended from government, the term subsidy can relate to any type of support – for example from NGOs or as implicit subsidies. Subsidies come in various forms including: direct and indirect.

A patient's bill of rights is a list of guarantees for those receiving medical care. It may take the form of a law or a non-binding declaration. Typically a patient's bill of rights guarantees patients information, fair treatment, and autonomy over medical decisions, among other rights.

Prescription drug prices in the United States continually rank among the highest in the world. The high cost of prescription drugs became a major topic of discussion in the 21st century, leading up to the U.S. health care reform debate of 2009, and received renewed attention in 2015. High prescription drug prices have been attributed to government-granted monopolies to manufacturers and organizations lacking ability to negotiate prices.

An orphan drug is a pharmaceutical agent developed to treat medical conditions which, because they are so rare, would not be profitable to produce without government assistance. The conditions are referred to as orphan diseases.

Incentive something that motivates an individual to perform an action

An incentive is a contingent motivator. Traditional incentives are extrinsic motivators which reward actions to yield a desired outcome. The effectiveness of traditional incentives has changed as the needs of Western society have evolved. While the traditional incentive model is effective when there is a defined procedure and goal for a task, Western society started to require a higher volume of critical thinkers, so the traditional model became less effective. Institutions are now following a trend in implementing strategies that rely on intrinsic motivations rather than the extrinsic motivations that the traditional incentives foster.

A land grant is a gift of real estate – land or its use privileges – made by a government or other authority as an incentive, means of enabling works, or as a reward for services to an individual, especially in return for military service. Grants of land are also awarded to individuals and companies as incentives to develop unused land in relatively unpopulated countries; the process of awarding land grants are not limited to the countries named below. The United States historically gave out numerous land grants as Homesteads to individuals desiring to prove a farm. The American Industrial Revolution was guided by many supportive acts of legislatures promoting commerce or transportation infrastructure development by private companies, such as the Cumberland Road turnpike, the Lehigh Canal, the Schuylkill Canal, and the many railroads that tied the young United States together.

In the healthcare industry, pay for performance (P4P), also known as "value-based purchasing", is a payment model that offers financial incentives to physicians, hospitals, medical groups, and other healthcare providers for meeting certain performance measures. Clinical outcomes, such as longer survival, are difficult to measure, so pay for performance systems usually evaluate process quality and efficiency, such as measuring blood pressure, lowering blood pressure, or counseling patients to stop smoking. This model also penalizes health care providers for poor outcomes, medical errors, or increased costs. Integrated delivery systems where insurers and providers share in the cost are intended to help align incentives for value-based care.

HIV/AIDS in India

HIV/AIDS in India is an epidemic. The National AIDS Control Organisation (NACO) estimated that 2.11 million people lived with HIV/AIDS in India in 2015. Despite being home to the world's third-largest population of persons with HIV/AIDS, the AIDS prevalence rate in India is lower than that of many other countries. In 2016, India's AIDS prevalence rate stood at approximately 0.30%—the 80th highest in the world. Treatment of HIV/AIDS is primarily via a "drug cocktail" of antiretroviral drugs and education programs to help people avoid infection.

Fee-for-service (FFS) is a payment model where services are unbundled and paid for separately.

Eculizumab, sold under the trade name Soliris among others, is a medication used to treat paroxysmal nocturnal hemoglobinuria (PNH), atypical hemolytic uremic syndrome (aHUS), and neuromyelitis optica. In people with PNH, it reduces both the destruction of red blood cells and need for blood transfusion, but does not appear to affect the risk of death. Eculizumab was the first drug approved for each of its uses, and its approval was granted based on small trials. It is given in a clinic by intravenous (IV) infusion.

Amifampridine chemical compound

Amifampridine is used as a drug, predominantly in the treatment of a number of rare muscle diseases. The free base form of the drug has been used to treat congenital myasthenic syndromes and Lambert–Eaton myasthenic syndrome (LEMS) through compassionate use programs since the 1990s and was recommended as a first line treatment for LEMS in 2006, using ad hoc forms of the drug, since there was no marketed form.

Homeless dumping Inappropriately releasing homeless or indigent patients

Homeless dumping or patient dumping is the practice of hospitals and emergency services inappropriately releasing homeless or indigent patients to public hospitals or on the streets instead of placing them with a homeless shelter or retaining them, especially when they may require expensive medical care with minimal government reimbursement from Medicaid or Medicare. The term homeless dumping has been used since the late 19th century and resurfaced throughout the 20th century alongside legislation and policy changes aimed at addressing the issue. Studies of the issue have indicated mixed results from the United States' policy interventions and have proposed varying ideas to remedy the problem.

Health care in Australia

Health care in Australia has a highly developed structure, though because of the nations' vast size, services are not evenly distributed geographically. Health care is delivered in Australia by both government and private companies which are often covered by Medicare. Health care in Australia is largely funded by the government at national, state and local governmental levels, as well as by private health insurance; but the cost of health care is also borne by not-for-profit organisations, with a significant cost being borne by individual patients or by charity. Some services are provided by volunteers, especially remote and mental health services.

The welfare trap theory asserts that taxation and welfare systems can jointly contribute to keep people on social insurance because the withdrawal of means-tested benefits that comes with entering low-paid work causes there to be no significant increase in total income. An individual sees that the opportunity cost of returning to work is too great for too little a financial return, and this can create a perverse incentive to not work.

In economics, a negative income tax (NIT) is a system within an income tax where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government. In its working NIT is equivalent to most forms of Basic income.

Cobra effect The case of a solution unintendedly making the problem worse

The cobra effect occurs when an attempted solution to a problem makes the problem worse, as a type of unintended consequence. The term is used to illustrate the causes of incorrect stimulation in economy and politics.

The cost of HIV treatment is a complicated issue with an extremely wide range of costs due to varying factors such as the type of antiretroviral therapy and the country in which the treatment is administered. The first line therapy of HIV, or the initial antiretroviral drug regimen for an HIV-infected patient, is generally cheaper than subsequent second-line or third-line therapies. There is also a great variability of drug prices among low, middle, and high income countries. In general, low-income countries have the lowest cost of antiretroviral therapy, while middle- and high-income tend to have considerably higher costs. Certain prices of HIV drugs may be high and difficult to afford due to patent barriers on antiretroviral drugs and slow regulatory approval for drugs, which may lead to indirect consequences such as greater HIV drug resistance and an increased number of opportunistic infections. Government and activist movements have taken efforts to limit the price of HIV drugs.

Onasemnogene abeparvovec, sold under the brand name Zolgensma, is a gene therapy medication used to treat spinal muscular atrophy (SMA). It was approved for children less than two years old in 2019. It is used as a one-time injection into a vein with at least two months of corticosteroids.

A wage subsidy is a payment to workers by the state, made either directly or through their employers. Its purposes are to redistribute income and to obviate the welfare trap attributed to other forms of relief, thereby reducing unemployment. It is most naturally implemented as a modification to the income tax system.

References

  1. Siebert, Horst (2001). Der Kobra-Effekt. Wie man Irrwege der Wirtschaftspolitik vermeidet (in German). Munich: Deutsche Verlags-Anstalt. ISBN   3-421-05562-9.
  2. Schwarz, Christian A. (1996). NCD Implementation Guide. Carol Stream Church Smart Resources. p. 126. Cited in Brickman, p. 326.
  3. Michael G. Vann, "Of Rats, Rice, and Race: The Great Hanoi Rat Massacre, an Episode in French Colonial History," French Colonial History Society, May, 2003
  4. Protesters in straitjackets demand inquiry of Duplessis Orphans era
  5. Allegations of child abuse
  6. Orphans sue Catholic orders over mistreatment
  7. Department for Communities and Local Government (2002). "Fire" Archived 2004-08-01 at the Wayback Machine . In Consultation on the Local Government Finance Formula Grant Distribution. Retrieved November 10, 2006.
  8. III, Carl C. Swisher; Curtis, Garniss H.; Lewin, Roger (November 2001). Java Man: How Two Geologists Changed Our Understanding of Human Evolution. University of Chicago Press. ISBN   9780226787343.
  9. James C. Robinson, Reinvention of Health Insurance in the Consumer Era (2004). In JAMA, April 21, 2004; 291: 1880–1886. Retrieved 2008-01-12
  10. Myndans, Seth (2007-08-25). "Cute Kitty Is Pink Badge of Shame in Bangkok". The New York Times . Retrieved 2007-11-06. It is the pink armband of shame for wayward police officers, as cute as it can be, with a Hello Kitty face and a pair of linked hearts.
  11. Stephen Dubner and Steven Levitt, Unintended Consequences, New York Times Magazine, 20 January 2008
  12. Bebchuk, L., & Fried, J. M. (2005) "Executive Compensation at Fannie Mae: A Case Study of Perverse Incentives, Nonperformance Pay, and Camouflage" Journal of Corporation Law, 30 (4): 807–822.
  13. Mark Zwonitzer, writer, PBS American Experience documentary "Transcontinental Railroad" (2006) "Program Transcript . Transcontinental Railroad . WGBH American Experience"
  14. "Gassing up the welfare trap machine", 6 January 1997, Atlantic Institute for Market Studies
  15. Daniel Gross (20 Feb 2005). "Why a Real Estate Agent May Skip the Extra Mile". The New York Times. Archived from the original on 29 May 2015.
  16. B. Douglas Bernheim; Jonathan Meer (13 Jan 2012). "Do Real Estate Brokers Add Value When Listing Services Are Unbundled?". The National Bureau of Economic Research. Retrieved 3 Sep 2016.
  17. Rosenthal, Elisabeth; Lehren, Andrew W. (2012-08-08). "Incentive to Slow Climate Change Drives Output of Harmful Gases". The New York Times. ISSN   0362-4331 . Retrieved 2015-07-02.
  18. Gupta, Anika. "Carbon credit scam slur on Indian firms". Hindustan Times. Retrieved 2015-07-02.
  19. Sanger-katz, Margot (2016-03-10). "Medicare Tries an Experiment to Fight Perverse Incentives". The New York Times. ISSN   0362-4331 . Retrieved 2016-07-30.
  20. "RHI scandal: RHI 'cash for ash' scandal to cost NI taxpayers £490m". BBC News . 23 December 2016.
  21. Cullen, Julie Berry; Long, Mark C.; Reback, Randall (2011). "Jockeying for Position: Strategic High School Choice Under Texas' Top Ten Percent Plan". NBER Working Paper 16663.
  22. Troutman, Eric J. (September 18, 2020). "Eleventh Circuit Court of Appeals Holds that Incentive Payments Commonly Awarded to Class Representatives are Impermissible in a Classwide Settlement". TCPA World. Retrieved September 19, 2020.
  23. Johnson v. NPAS Solutions( 11th Cir. September 17, 2020).
  24. Sonia Kennebeck, Heather Linebaugh, Daniel Hale, Lisa Ling (November 11, 2016). National Bird (DVD). Chapter 10. Event occurs at 1:03:36. Retrieved September 20, 2020. This is a daily thing... they're [DGS] supposedly saying they see women and children... [remote pilots at Creech AFB] says DGS is full of shit, they don't see anything... The DGS hated Creech because they [remote pilots at Creech AFB] were always trying to kill people... It looks good on their resume - if they kill more people.CS1 maint: location (link)

Further reading