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Motivation Crowding Theory: A Survey of Empirical Evidence

Bruno S. Frey
University of Zurich - Faculty of Business Administration - Institute for Empirical Research in Economics (IEW); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Swiss Federal Institute of Technology Zurich

Reto Jegen
University of Zurich - Faculty of Business Administration - Institute for Empirical Research in Economics (IEW)


January 2000

Zurich IEER Working Paper No. 26; CESifo Working Paper Series No. 245

Abstract:     
The motivation crowding effect suggests that an external intervention via monetary incentives or punishments may undermine (and under different indentifiable conditions strengthen) intrinsic motivation. As of today, the theoretical possibility of crowding effects is widely accepted among economists. Many of them, however, have been critical about its empirical relevance. This survey shows that such scepticism is unwarranted and that there exists indeed compelling empirical evidence for the existence of crowding out and crowding in. It is based on circumstantial insight, laboratory studies by both psychologists and economists as well as field research by econometric studies. The presented pieces of evidence refer to a wide variety of areas of the economy and society and have been collected for many different countries and periods. Crowding effects thus are an empirically relevant phenomenon, which can, in specific cases, even dominate the traditional relative price effect.

Keywords: Crowding Effect, Intrinsic Motivation, Principal-Agent Theory, Economic Psychology, Experiments

JEL Classifications: A12, J33, L22

Working Paper Series

Date posted: April 30, 2000 ; Last revised: August 10, 2004

Contact Information

Reto Jegen (Contact Author)
University of Zurich - Faculty of Business Administration - Institute for Empirical Research in Economics (IEW) ( email )
Bluemlisalpstrasse 10
CH-8006 Zurich 8006
Switzerland
+41 1 63 43795 (Phone)
Bruno S. Frey
University of Zurich - Faculty of Business Administration - Institute for Empirical Research in Economics (IEW) ( email )
Winterthurerstrasse 30
CH-8006 Zurich Switzerland
+41 44 634 37 31 (Phone)
+41 44 634 35 99 (Fax)
CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
DE-81679 Munich Germany
HOME PAGE: http://www.CESifo.de
Swiss Federal Institute of Technology Zurich ( email )
Zürichbergstrasse 18
8092 Zurich CH-1015
Switzerland
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