Performance Bonuses in the Public Sector: Winner-Take-All Prizes Versus Proportional Payments to Reduce Child Malnutrition in India
34 Pages Posted: 31 Oct 2018
Date Written: October 7, 2018
We conduct a randomized trial to compare incentives for improved child outcomes among salaried caregivers in Chandigarh, India. A winner-take-all prize paid to the best performer yielded less improvement than dividing the same award among workers in proportion to their share of measured gains. In our population of about 2,000 children served by 85 workers, using proportional rewards led to weight-for-age malnutrition rates that were 4.3 percentage points lower at 3 months (when rewards were paid) and 5.9 points lower at 6 months (after the contest had ended), with mean weight-for-age z scores that were .071 higher at 3 months, and .095 higher at 6 months. Proportional bonuses led to larger and more sustained gains because of better performance by lower-ranked workers, whose efforts were not rewarded by a winner-take-all prize. Results are consistent with previous laboratory trials and athletic events, demonstrating the value of proportional rewards to improve development outcomes.
Keywords: contest design, performance pay, malnutrition, underweight, child development
JEL Classification: O1, I1, M5
Suggested Citation: Suggested Citation