Financial Rewards Do Not Stimulate Co-Production: Evidence from Two Experiments

Western governments are increasingly trying to stimulate citizens to ‘co-produce’ public services, among others, by offering them financial incentives. However, there are competing views on whether financial incentives stimulate co-production. While some argue it increases citizens’ willingness to co-produce, others suggest that it would decrease their willingness (i.e., crowding-out). To test these competing expectations, we designed a set of experiments that offered subjects a financial incentive to assist municipalities in helping refugees to integrate. First, we conducted an experiment among university students (n=160) within a laboratory setting. Second, we replicated and extended initial findings among a general adult sample (n=1,359). Results suggest that small financial rewards have no effect: they neither increase nor decrease people’s willingness to co-produce. When the offered amount is increased substantially (from 2 to 10 Euro/hour), willingness to co-produce only increases marginally. Hence, financial incentives are not a very cost-efficient instrument to stimulate co-production.

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