The Carrot (incentive) or the Stick (the sanction): Which is more effective in c
ID: 3470714 • Letter: T
Question
The Carrot (incentive) or the Stick (the sanction): Which is more effective in changing the behavior and enforcing rules for social welfare program recipients? Answer in 4-5 sentences The Carrot (incentive) or the Stick (the sanction): Which is more effective in changing the behavior and enforcing rules for social welfare program recipients? Answer in 4-5 sentences The Carrot (incentive) or the Stick (the sanction): Which is more effective in changing the behavior and enforcing rules for social welfare program recipients? Answer in 4-5 sentencesExplanation / Answer
On my view, financial sticks in the form of benefit sanctions were effective in stimulating the exit of recipients from social welfare programs. While welfare recipients have an obligation to actively search for work, it may not always be materialized. In this case, financial sticks are much more effective in stimulating the transition from welfare to work than financial rewards. A possible explanation is that sanctions include an immediate financial consequence for the welfare recipient, while incentives are a promise on a payment in the future. Welfare recipients may suffer from some degree of present bias and may heavily discount uncertain delayed payments such as cash bonuses.
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