Chapter 12: Do not miss the opportunity! When to introduce monetary incentives
Every day we produce an enormous amount of solid waste that we must eliminate somehow. Options include burying waste in landfills or burning it in incinerators. However, landfills may store only a small part of our waste, and they often find resistance in local communities (Kinnaman and Fullerton 2000); incinerators are expensive and their consequences on health and the environment seem controversial (see British Society for Ecological Medicine 2005, Health Protection Agency 2005). The best solution seems to sort domestic waste, which will then be recycled. At the moment this process is the simplest, least expensive and most environment-friendly way of treating waste but it requires the cooperation and the virtuous behavior of citizens. Are economic incentives (monetary and nonmonetary) an effective tool to increase the sorted waste ratio1 (henceforth SWR) and induce households to increase their willingness to sort? Economic incentives have been widely used to promote virtuous behaviors in many different contexts, for example the promotion of healthy habits such as attending an exercise facility (Charness and Gneezy 2009) or safe driving (Dionne et al. 2011). Incentives have also been used to reduce harmful behavior such as cigarette smoking (Gruber and Köszegi 2001), alcohol consumption (Cook and Tauchen 1982), and junk food eating (Jacobson and Brownell 2000).
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