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Motivations to Contribute to Public Goods: Beyond rational choice economics

Florin Popa* Belgian Biodiversity Platform, Belgium

ABSTRACT The dominant understanding of how motivations to contribute to public goods are generated and sustained is largely shaped by the combined action of rational choice theory and neoclas- sical economics. This understanding relies on three key assumptions: individualism, instru- mentalism and market equilibration. This paper questions the theoretical consistency and empirical relevance of these assumptions and of their associated policy model. I argue that a significant revision of this motivational theory is needed, one that takes into account intrin- sic incentives, trust and strong reciprocity, as well as the effect of social and institutional con- text, monetization and market interactions on the propensity to contribute to public goods. The paper concludes by outlining the implications of this theoretical reconsideration for the organization of scientific research and for more effective policy-making to sustain public goods provision. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment

Received 15 September 2013; revised 6 May 2014; accepted 11 September 2014

Keywords: crowding out; intrinsic incentives; public goods; rational choice theory; reciprocity; trust

Introduction

A LTHOUGH INITIALLY INTERESTED MAINLY IN MODELLING ECONOMIC BEHAVIOUR – FOR INSTANCE, CONSUMER CHOICES

under given budgetary and socio-institutional constraints (Michael and Becker, 1973) – rational choice the- ory (RCT) has gradually extended its explanatory ambitions to human decision-making and action in gen- eral. RCT development is rooted in the time-honoured interest of philosophers and social scientists with

rationality, understood as an explanatory precondition of human agency. The fact that we consider some beliefs as true, some decisions as appropriate or some moral values as well-grounded already presupposes an understand- ing (even if implicit and fuzzy) of how these beliefs, decisions and values can be rationally justified. The classic dis- tinction between theoretical and practical rationality illustrates this double requirement of epistemological grounding (how we distinguish knowledge from mere opinion) and practical justification (how we use knowledge to guide our action). Rationality is taken to provide not simply a possible way of explaining actions, but the precon- ditions of any possible theory of human action: ‘If an institution or a social process can be accounted for in terms of the rational actions of individuals, then and only then can we say that it has been “explained”.’ (Coleman, 1986: 1). Popper (1996) has called this explanatory precondition the ‘principle of rationality’. The principle re- quires that explanations of human conduct must mobilize general norms or rules to make sense of individual actions. Just as the covering law models of natural sciences attempt to subsume individual events under

*Correspondence to: Florin Popa, Belgian Biodiversity Platform, Belgian Science Policy Office (BELSPO), Avenue Louise 231, B-1050 Brussels, Belgium. E-mail: [email protected]

Environmental Policy and Governance Env. Pol. Gov. 25, 230–242 (2015) Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/eet.1684

general laws (either deterministic or probabilistic), rationality assumes that, insofar as they can be explained, subjects’ actions are understandable as the result of purposeful, goal-directed behaviour, in contrast to habit- ual, impulsive or instinctive behaviour. The principle does not make an anthropological claim (‘people are rational’), but rather an epistemological claim (‘explaining human action means relating it to given goals and the means chosen to reach them’).

RCT offers an interesting example of how the principle of rationality can be developed into a fully fledged theory of individual and collective action, based on three key assumptions: individualism, instrumentalism and market equil- ibration (Abell, 1991; Boudon, 2003; Arnsperger and Varoufakis, 2006). This paper discusses the implications of this theory for the domain of motivations to contribute to public goods. Certainly, RCT is not particularly interested in how preferences and preference orderings are generated; in the instrumental utility calculus of the theory, they are taken as given. Nevertheless, RCT’s assumptions have important implications for the treatment of motivations to contribute to public goods and on the policy tools designed to encourage such motivations. These implications become explicit in neoclassical economic analysis. The following sections focus on these three assumptions and the corresponding understanding of motivations for public goods provision. Building on recent research in social psychology, behav- ioural economics and institutional theory, I propose a reconsideration of the dominant theory of motivations, which is based on RCT and neoclassical economics. The paper concludes by discussing the implications of this reconsider- ation for the organization of scientific research and for policy development concerning public goods provision.

The Theoretical Assumptions of Rational Choice Economics

Given the joint development and mutual reinforcement of RCT and neoclassical economics (Zafirovski, 2000), as well as its continuing influence on policy-making concerning public goods, I will jointly refer to the three assump- tions discussed below (individualism, instrumentalism and equilibrium) as forming the basis of rational choice eco- nomics (RCE). The aim of RCE is to offer not simply an economic theory, but an epistemological theory and methodological model applicable across the social sciences. Generally, the ‘economic approach’ to human behaviour has assumed ‘atomistic individuals free from complex interdependencies, the pursuit of pure self-interest (con- strued as happiness), farsighted rationality and accurate cost-benefit calculation, market equilibrium and/or (the Pa- reto) optimum, parametric individual preferences/values, technologies, social institutions and cultures, consistent maximization of profit (producers) and utility (consumers), free and perfect competition, a laissez-faire government, full knowledge and complete information, etc.’ (Zafirovski, 2000: 448). Obviously, these features have not been sys- tematically present in RCT applications to economics or social sciences more broadly. However, there are some key assumptions that have endured through time and continue to define the rational choice approach and its articulation in neoclassical economics (Boudon, 2003; Arnsperger and Varoufakis, 2006).

The first assumption, instrumentalism, postulates that rational action deals exclusively with the choice of means to attain specific ends (as expressed, for instance, through the subject’s preference curves). A first additional as- sumption is thus tacitly added to the core understanding of rationality: not only are subjects assumed to act purpose- fully, but their practical rationality is evaluated strictly on the basis of their instrumental action, taking objectives and preferences as given. RCE is not particularly interested in how these objectives and preferences have been formed or in their normative justification and desirability. In Max Weber’s terms, RCE embraces explicitly a formal rather than substantive view of rationality. However, the theory does impose a peculiar constraint on the way rational subjects follow their goals. Rational action requires that subjects try to maximize individual utility, rather than just looking for acceptable or satisfactory solutions. The optimization assumption has its origin in microeconomics, specifically consumer behaviour: just as consumers will allocate a given budget between different goods so the marginal utility of every euro spent on one good is equal to the marginal utility of one euro spent on any other good, the rational actor is supposed to balance costs and benefits attached to different available courses of action and choose the option that maximizes the net benefit. While bounded rationality models have dropped optimization in favour of more re- alistic behavioural assumptions, some RCE theorists continue to uphold it implicitly. Richard Posner, a leading ad- vocate of the rational choice approach to law, calls the evidence of behavioural economists against the assumption of utility-maximization ‘cognitive quirks’ and explicitly denies that they pose a major problem to the rational choice

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model (Posner, 1998). In his view, these dissident cases can be brought back under the umbrella of rationality by conveniently adjusting either the core assumptions (for instance, what self-regarding behaviour actually covers) or the additional assumptions (for instance, whether rationality necessarily implies conscious behaviour or not).

The second key assumption is individualism. For RCE theorists, the individual is the ‘elementary particle’ in terms of which larger, aggregate outcomes can be represented and explained. Individualism was generally espoused as a methodological position: Friedman (1953) famously claimed that assumptions are ‘useful fictions’ intended to generate successful predictions, not to represent reality. They can therefore be held as long as they fulfil their instru- mental predictive role. However, the history of RCE development suggests that it is practically impossible to completely separate methodological individualism from its more substantive – ontological and ethical - dimensions. The assertion that ‘only the individual chooses, and that rational behavior, if introduced at all, can only be discussed meaningfully in terms of individual action’ (Buchanan and Tullock, 1965: 000) or that ‘to explain social institutions and social change is to show how they arise as the result of the action and interaction of individuals’ (Elster, 1986: 13) illustrate well the fuzzy border between methodological and ontological claims. These claims can be understood (1) as actually implying that only individuals have ontological status or (2) as heuristic devices for investigating spe- cific problems. This ambiguity has been speculated by rational choice theorists and neoclassical economists to shel- ter key assumptions from criticism and contradicting evidence (Arnsperger and Varoufakis, 2006). The covert ontological, ethical and political implications of individualism could thus be maintained without explicitly assuming the burden of justification.

Finally, the third assumption is concerned with processes of social aggregation or, more precisely, the alignment of individual actions and collective outcomes. Social coordination dilemmas are pervasive. Self-interested individ- uals may overconsume, free-ride or otherwise refuse to cooperate. Or they may well engage in strategic cooperation to improve individual or group outcomes, at the cost of undermining public interest. The social exchange theory proposed by RCE to explain aggregate action assumes that there is a mechanism of coordination that aligns self- interest with common interest through self-generated, endogenous equilibration. For neoclassical economists, equi- librium is not just one assumption among others, it is what sets neoclassicism apart from other approaches and forms its disciplinary core (Mas-Colell et al., 1995: 620). Without equilibrium, the micro foundations of individual choice (the ‘representative agent’ model) cannot be meaningfully connected to macro processes of preference aggre- gation, collective decision and governance. In this context, it is hardly surprising that the proponents of the Walrasian general equilibrium model appreciated it as ‘the single most important contribution of economics to so- cial sciences’ (Arrow and Hahn, 1971: 1).

Two key approaches to equilibrium can be distinguished. The first has been developed primarily in game theory and deals with direct interaction between multiple agents. It analyses the conditions under which independent sub- jects arrive at mutually acceptable situations in which nobody has an incentive to unilaterally change strategy: the Nash equilibrium. The second approach has been developed by economists in the context of the ‘marginalist revo- lution’ and of work on partial equilibrium and general equilibrium theory (Henry, 2012). It focuses on ‘impersonal’ market interactions, driven by price signals determined by supply and demand. The strategic and market-based un- derstandings of equilibrium differ in their perspective on how equilibrium is generated or maintained, but they share a tendency to regard equilibrium as the epistemological and normative default position. In fact, the equilib- rium postulate is the key ingredient of the efficient markets hypothesis, an ‘analytical panacea that permeates all in- stances of theorizing about the market’ (Hülsmann, 1999: 10).

Although the fusion of RCT and neoclassical economics into a sui generis theoretical programme (called here RCE) is a product of the 20th century, the three assumptions discussed above have a much longer history. They go back to the ‘marginalist revolution’ of the 19th century, and its interest in objectifying and formalizing economic rationality. In 1908, Thorstein Veblen was already voicing some of the criticisms that have been echoed repeatedly since then. He was slating the neoclassical theory of capital, utility and value as being reductionist, ignorant of the ‘accumulated experience of mankind’ and inconsistent with its own principles (Veblen, 1908). Much later, based on mounting evidence from social psychology and behavioural economics, ecological economists have argued that ‘the microeconomic axioms of choice make assumptions which are at best inconsistent with theories of modern psychol- ogy and empirical evidence’ (Getzner et al., 2005: 3) and that economic models often dismiss the ‘frequent occur- rence of behaviors which are inconsistent with accepted economic norms’ (Getzner et al., 2005: 4). Critics have also exposed RCE’s post-hoc theorizing (the convenient theoretical adjustment to fit the data post factum) and biased

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data selection (focusing on carefully chosen cases that support the theory, while ignoring or underestimating refut- ing evidence; Green and Shapiro, 1994; Keen, 2011).

Nonetheless, despite criticism, the second half of the 20th century was marked by a hardly contained enthusiasm in applying RCE to explain an indefinitely broad range of human actions. Such applications have been proposed in sociology (Coleman and Fararo, 1993), political science (Downs, 1957) and collective action theory (Barry and Russell, 1982). Particularly during the 1960s and 1970s, RCE helped in establishing its model of economic behav- iour as an explanatory standard by reference to which other types of behaviour can be modelled (Becker, 1976; Coleman, 1994). In the 1980s, Jon Elster could still claim that there is ‘no alternative to rational choice theory as a set of normative prescriptions’ (Elster, 1986: 22). It is interesting to note that this basic, unquestioned adherence to the model went way beyond mainstream RCE. It extended to behavioural social theorists, such as Herbert Simon, who was interested in providing a more solid behavioural foundation for RCT (Simon, 1955), and to institutional theorists such as Elinor Ostrom, who saw rational choice - at least initially - as an essential tool for the development of institutional analysis (Ostrom, 1991).

RCE’s Theory of Motivations and Its Policy Implications

In standard microeconomic theory, individuals act on the basis of beliefs about events (governed by probability dis- tributions) and preferences about the outcomes of events (represented by utility functions and preference order- ings). Individuals, households and firms are assumed to make choices that optimize their expected utility under given constraints (available budget, incomplete and imperfect information, given bundles of goods at given market prices, etc.). For consumers, maximum utility is achieved when the marginal utility of the last euro spent on one product equals the marginal utility of the last euro spent on any other product (the equimarginal principle). For mul- tiple agents in a Pareto-optimal allocation, the ratios of marginal utilities between pairs of commodities must also be the same for all agents. In the case of firms, the maximum utility is achieved when the firm produces a given output at the least possible cost by equalizing the marginal product per euro spent on each production input (the least cost rule). Under the additional assumption of perfectly competitive markets, a firm will tend to produce the quantity for which the marginal cost equals price (Samuelson and Nordhaus, 1995). Everything can be elegantly expressed in terms of supply and demand curves, intersecting marginal costs and utilities, production functions, U-shaped cost curves and least-cost tangencies.

Due to its instrumentalist and individualist approach, RCE is neutral in regard to existing preferences and pref- erence orderings. Rational action is assumed to deal only with the choice of means to achieve given ends. Motivations and beliefs are either explicitly linked to self-interested action (Boudon, 2003) or taken as if they were orientated by self-interest (Friedman, 1953). Collective preferences and public interest are meaningful concepts for RCE only insofar that they refer to aggregated individual preferences. But for individual preferences and valuations to be aggregated, they need to be commensurable. The assumption of commensurability is essential for RCE’s theory of motivations, as it provides the conceptual and methodological bridge between the micro model of individual choice (RCT) and macro social processes (neoclassical macroeconomics and public choice theory). Individual utility-maximization can therefore be assumed to ‘translate’ into some type of social maximization, although it is recognized that these ‘translations’ are marred by difficulties (Arrow, 1951) and are always partial. The limits of pref- erence aggregation, already well acknowledged by rational choice theorists, have prompted economists to further emphasize market equilibration, which is supposed to provide a coordination mechanism that works despite failures of voluntary, rule-based aggregation of preferences. In contrast to rule-based aggregation, where aggregation out- comes depend on the specific set of rules chosen - for instance, Arrow’s criteria for eliciting a social choice function (ibid.) - market equilibration is supposed not to depend on adopting one particular set of rules. It does not even re- quire that agents are systematically rational. All that it takes for markets to work their magic – according to the effi- cient market hypothesis – is that agents have rational expectations (i.e. they adjust their prospects according to newly available information). But introducing rational expectations into the picture is just a way of solving one problem by creating others. It brings along with it several assumptions (e.g. that transaction costs are usually negligible or that

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agents follow a normal probability distribution in overreacting or underreacting to market events) that have a weak empirical basis (Lo and MacKinlay, 2011).

The motivations of Homo economicus are assumed to depend on the expected individual utility to be gained by engaging in action A rather than actions B or C, insofar as A is likely to offer the highest expected utility according to some form of cost–benefit analysis. Interacting self-interested agents are assumed to under-provide public goods, as they do not fully realize their importance, are unwilling to assume responsibility or prefer to free-ride. RCE as- sumes that individuals must be induced to contribute using incentives and deterrents that change the perceived bal- ance of individual costs and benefits (which would naturally yield negative utility) and align the agent’s private interests with the public interest at stake. From the perspective of the authority in charge of mobilizing support for public goods provision, the motivational problem to be solved is finding the right configuration of extrinsic in- centives (to promote desirable behaviour) and disincentives (to discourage undesirable action). A ‘stick and carrot’ policy model is thus the almost unavoidable consequence of an instrumental and hedonistic theory for which indi- viduals represent sets of given preferences rather than reflexive, learning and socially embedded subjects. Policy in- terventions are conceived as technocratic fixes proposed by experts on the basis of objective, value-neutral knowledge, which aim to facilitate contribution to public goods using a combination of appeal to self-interest and imposed con- straint. It is somehow ironic that a theory centred on the individual ends up promoting a paternalistic and techno- cratic policy model in which ‘expert guidance’ is needed to orientate individual behaviour in socially desirable ways. The standard game-theoretical analysis also predicts that the participants’ motivation to contribute can only increase if extrinsic incentives are added to the picture (in other words, that intrinsic and extrinsic incentives are additive). The policy and governance implications of the motivational theory sketched above are presented in Table 1.

Environmental policy provides a relevant example. To protect environmental resources and ensure sustainable use, RCE has generally considered three types of interventions by public authorities: direct controls (compulsory regulations concerning individual and company behaviour), emission taxes (proportional to the level of pollution or environmental damage) and tradable emission permits (setting a maximum level of permissible pollution and allocating a fixed number of ‘pollution permits’ that can be freely traded) (Samuelson and Nordhaus, 1995). As far as markets are concerned, the essential role of authorities is taken to be the avoidance or minimization of market failures (such as monopolies or different types of negative externalities and information asymmetries). Environmen- tal public goods are often subject to free-riding and overuse - and this justifies government intervention to ensure a minimum level of provision. Thus, a system of incentives is created to align the action of self-interested agents to the public objective at stake. Offering monetary incentives is supposed to work by providing a reward for the loss of util-

RCE core assumptions

Additional specific assumptions Policy/governance implications

Instrumentalism and utility maximization

Beliefs as the products of self-interest; assumptions as ‘useful fictions’; focus on preferences not reasons for preferences; focus on wants not needs.

Technocratic governance: experts providing value-neutral, objective knowledge to support policy development.

Utilitarianism; value commensurability and comparability. Cost–benefit analysis; comparison of different types of values according to single scale (monetary).

Individualism Self-regarding behaviour. Behavioural change induced through extrinsic incentives reinforcing self-interest.

‘Stick and carrot’ policy model: combination of incentives and penalties to align individual interest with policy objectives.

Equilibrium Efficient markets hypothesis; focus on equilibrium conditions rather than on tackling out-of-equilibrium states.

Market-based conditional payments for voluntary contributors to public goods.

Deregulation, privatization.

Table 1. RCE’s core assumptions, auxiliary assumptions and policy/governance implications

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ity implied by their contribution to public good provision. The tacit assumption is that agents need to be compen- sated for their public contribution, and that in general it is neither realistic nor reasonable to expect voluntary, un- conditional contribution. Despite evidence to the contrary from social psychology and behavioural economics, this assumption seems to have spellbound mainstream economists. The rapid development of payments for ecosys- tem services (PES) schemes, especially since the 2000s, illustrates the broad appeal of this policy model which aims at ‘realigning the private and social benefits that result from decisions related to the environment’ (Jack et al., 2008: 9465). Many ecological economists, environmentalists and ecologists, who have been otherwise quite critical of the neoclassical postulates, have also jumped on the bandwagon of market valuation and monetization (Spash, 2009). These ‘new environmental pragmatists’ argue that one needs to adopt the dominant valuation and policy discourse to be able to push forward the environmental agenda. In short, ‘selling the environment to preserve it became the accepted credo’ (Spash, 2009: 253).

Unsettling RCE Assumptions: Intrinsic Values, Social Norms, Reflexivity and Trust

RCE’s understanding of human agency and collective action has generated a theory of motivations that assumes self-interested utility-maximizers who are moved primarily by extrinsic incentives and deterrents. This theory ex- tends into a policy model that focuses on technocratic intervention to ‘nudge’ individual behaviours and align them with public interest. But the practical outcomes of this theory of motivations and its associated policy model are disturbing. Environmental protection provides a telling example. Over the last half century or so, human impact on global life-support systems has reached a magnitude unprecedented in human history (Jerneck et al., 2011). The Millennium Ecosystem Assessment has estimated that 60% of the ecosystems upon which human systems de- pend for their survival are degraded (MEA, 2005). While pro-growth policies, deregulation and the expansion of market thinking into new areas have contributed to technological development and gross domestic product growth, the benefits of development have been undermined by the ongoing accumulation of environmental externalities (pollution, waste, loss of biodiversity, as well as increasing inequality in the distribution of environmental costs and benefits). Given its focus on self-interested action based on cost–benefit analysis, RCE has largely ignored the social and environmental costs of natural degradation and resource depletion, and has often failed to crowd in motivations to contribute to environmental protection (Kinzig et al., 2011). The next sections address the limits of this policy model by questioning the core assumptions of RCE and proposing a significant revision of the moti- vational theory that it supports. I discuss the role of intrinsic incentives, social context, trust and strong reciprocity, and the effect of money and market interactions on norms and values. I then outline the policy and governance im- plications of such a revised understanding.

Intrinsic Incentives

This section discusses the role of non-instrumental or intrinsic incentives as a sui generis, irreducible category of mo- tivations along instrumental ones. They refer to incentives that are interesting, valuable or enjoyable in themselves, not merely as a means of achieving some other objective. While they are not independent of the social context, they demonstrate a degree of autonomy from external constraints and incentives, as for instance when agents keep on complying with the terms of a contract even at the expense of their own benefit or interests. People often choose to act in a certain manner because they are committed to particular values and because they regard certain norms as hav- ing normative authority – more precisely, because they internalize their normativity. For instance, Self-Determination Theory (Deci and Ryan, 1985; Ryan and Deci, 2000) focuses on the way subjects internalize external regulations and values. They identify three innate psychological needs that support the process of internalization� competence, au- tonomy and relatedness – and argue that they manifest themselves across cultures. The way intrinsic and extrinsic incentives interact is thus explained by reference to their tendency of reinforcing or undermining these drivers of self-determination. In particular, intrinsic motivation is crowded in by circumstances that convey a sense of increased competence, and is crowded out by a perceived decrease in competence (Deci and Ryan, 1985).

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Behaviours largely based on intrinsic incentives and non-instrumental norms are characterized as eudaimonic, in the sense of being part of a broader understanding and scheme of values underlying the subject’s understanding of the ‘good life’ (Deci and Ryan, 2008). They are contrasted with a hedonistic approach – adopted by RCE’s theory of motivations – according to which subjects strive to maximize well-being understood as the occurrence of positive affect and the absence of negative affect. Eudaimonic behavioural types manifest predominantly intrinsic values. Therefore, one ‘can distinguish a eudaimonic lifestyle from a non-eudaimonic one by the degree to which people’s energies and interests are focused on intrinsic values versus second or third order values and/or goals whose value is either derivative or unclear’ (Ryan et al., 2008: 149). Studies suggest that eudaimonic types manifest a more pro- social behaviour (Ryan et al., 2008).

The idea that people contribute to public goods only insofar as they have a personal interest or sufficiently pow- erful extrinsic incentives is challenged by empirical research showing relatively high levels of participation in the absence of extrinsic incentives (such as voluntary community work and contributions to humanitarian and environ- mental causes), but also by game-theoretical modelling showing that reciprocity-based strategies dominate the self- interested strategies in competitive markets with incomplete contracts (Fehr and Gächter, 2000). People choose to reciprocate, follow social norms and comply with self-imposed moral commitments, and sometimes provide altru- istically when there is no prospect of being rewarded for it. In other words, they act as concerned citizens who take responsibility for the well-being of others, as reflexive agents who strive to conform to self-imposed moral commitments.

The acknowledgment of non-instrumental incentives as irreducible elements in the analysis of motivations calls for policy measures that focus on (1) identifying the context-specific intrinsic incentives, values and understandings that guide behaviours and (2) designing appropriate regulatory and incentive systems that mobilize and build upon intrinsic incentives and other-regarding social norms. Therefore, the focus shifts from ready-made ‘technocratic fixes’ that are supposed to apply to whole categories of problems to adaptive management models based on multi-stakeholder, context-specific deliberation.

Social Embeddedness of Motivations

In a broad perspective, explanations in social theory can be positioned along a continuum from (individual) agency to (social) structure, according to how they identify the locus of agency (Sztompka, 1994). In this perspective, RCE strongly emphasizes agency at the expense of structure. While social context is deemed important, its importance is generally limited – to recall Reichenbach’s distinction � to the context of discovery rather than the context of justification.

But the social norms, institutional settings and regulatory frameworks in which collective action is taking place are not simply the ‘stage’ on which given individual motivations are played out. They can end up altering radically the types and relative strength of the motivational variables at play. In contrast to the rational choice approach, which explains compliance with social norms as the outcome of the strategic interactions of utility-maximizing individuals with given preference orderings and beliefs, social theory puts forward a model of Homo sociologicus, based on a con- cept of socially embedded rationality. This model ‘explains conformity to social norms in terms of the normativity of norms, and grounds that normativity in the ways individuals see norms as meaningfully expressing their social identities, their relationships to other people, or shared intentions and values’ (Anderson, 2000: 171). Social rela- tions are reflexive – they are rooted in communicative acts in which subjects reconsider and often modify their own perceptions, opinions and attitudes by responding to each other and to changes in the environment. Subjects respond ‘not just to bare incentives but to their interpretation of the intentions others express toward them in offer- ing incentives’ (Anderson, 2000: 175). Their actions can only be understood (i.e. rendered meaningful) in the social context in which they occur.

People’s motivations are also influenced by characteristics of groups they are part of, such as group size or group identity. In social psychology, Social Identity Theory (Brown, 2000) is based on the hypothesis that people are fun- damentally motivated to achieve a positive distinctiveness for themselves. This motivates them to identify with par- ticular groups and act on behalf of the group rather than in an individual capacity. In doing so, they strive to represent or embody the group values, and to maintain a positive image in their in-group, even when this leads to conflicts with or rejection by the out-groups (Hewstone et al., 2002). Christensen et al. (2004) also claim that

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greater identification with a group is associated with more positive emotions for members who conform to group norms. This suggests that greater adherence to group norms – including norms of reciprocity and contribution to collectively managed goods – is reinforced by positive emotions from reputational rewards and from an enhanced sense of competence and relatedness.

At policy level, this calls for enhanced attention to the normative background of motivations, particularly the norms of solidarity, trust and reciprocity that underlie non-instrumental propensity to contribute to public goods. At the same time, local institutional solutions to local problems – such as collaborative networks of practice relying on reciprocity and peer pressure – need to be better connected to higher policy-making levels. For instance, policy- makers can promote trust by relying less on coercion and more on participative approaches that promote empow- erment, self-enforcement and self-monitoring of compliance. Coercion can be a powerful deterrent, but it weakens the subject’s willingness to contribute voluntarily and his or her sense of responsibility, by sending a signal of dis- trust by authorities (Kahan, 2003) and by suggesting that coercion is needed because others are not willing to recip- rocate pro-social actions (Mitchell, 2001).

Trust and Strong Reciprocity

As argued above, trust plays a particularly important role in explaining how collective action for public goods is gen- erated and maintained. Trust provides a social mechanism that reduces uncertainty and transaction costs by replac- ing a constant risk calculus with a routine cooperation (Six et al., 2015). It can thus reduce defection, free-riding or overconsumption by replacing itemized cost–benefit analysis (which often results in non-cooperation) with a default ‘propensity to cooperate’. In this context, strong reciprocity is understood as a predisposition to cooperate with others and to punish those who violate the norms of cooperation, even when this implies a personal cost and it is implausible this cost will ever be repaid (Gintis et al., 2003). Fehr and Gächter (2000) discuss the importance of reciprocity for economics. For instance, they show that in competitive markets with incomplete contracts the recip- rocal types will do better than self-interested types in terms of aggregate outcomes. They also point out that free- riding can be minimized when subjects have the power to enforce sanctions or rewards to ensure compliance with group norms. The reciprocating types will punish others even when this implies an individual cost (risk of retalia- tion, loss of friendship, etc.) in a variety of institutional contexts. More generally, ‘shame’ and ‘honour’ incentives have been shown to influence significantly the propensity to cooperate (Henrich, 2006; Jacquet et al., 2012).

Collective action arrangements based on reciprocity and trust can be highly effective in sustaining cooperative behaviour, even in the absence of externally imposed regulatory systems or incentives (Ostrom, 1990, 2005). Al- though clearly distinct from both state and market, self-organized collective action can benefit from or be undermined by external intervention. What makes the difference is the way external interventions are aligned with pre-existing norms and practices, and with the socio-normative context more broadly. Communities often self- organize to devise and enforce norms of cooperation, sharing and access to resources, and in doing so they mobilize not only material interests but also (to use Adam Smith’s term) ‘moral sentiments’. Individuals who have trust in the willingness of others to contribute their fair share will voluntarily respond in kind. Trust reinforces itself and grows with use (Mitchell, 2001): the more people are trusted, the more they will tend to behave in ways that rein- force their reputation of trustworthiness. Beyond its role in structuring social networks, as emphasized by social cap- ital theory (Putnam, 2001; Castelfranchi et al., 2006), trust is essential in mobilizing pro-social behaviours in individuals who are neither exclusively self-interested nor systematically altruistic. Explaining moral commitments exclusively in terms of reputational rewards and ‘warm glow’ overlooks the way in which subjects internalize norms and values through social interaction and learning. In contrast to the static behavioural model of RCE, ‘one could assume that the individuals who calculate benefits and costs are fallible learners who vary in terms of the number of other persons whose perceived benefits and costs are important to them and in terms of their personal commit- ment to keeping promises and honoring forms of reciprocity extended to them’ (Ostrom, 2011: 13).

But existing trust and willingness to cooperate are fragile achievements (Van Vugt et al., 2000). They can be crowded-out by improperly designed institutions and, contrary to RCE’s assumption that extrinsic and intrinsic in- centives are additive, they can sometimes be crowded-out by extrinsic rewards (Frey and Oberholzer-Gee, 1997; Gneezy and Rustichini, 2000; Frey and Jegen, 2001). Crowding out arises when the manipulation of some incentive system generates adverse effects, although the incidence of crowding out and the conditions under which it arises

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are debated (Fiorillo, 2011; Fang and Gerhart, 2012). For instance, Cardenas et al. (2000) analysed the behaviour of Colombian farmers in the context of managing a common pool resource. The participants’ task was to decide how much timber to extract from the forest, knowing that harvesting had an adverse effect on water quality (and thus incurring a collective cost). After realizing that sanctions for not respecting the extraction norm were quite mild, the farmers increased their extraction levels beyond the quantities they were normally extracting without any regu- lations. Whatever intrinsic incentives and social norms against over-extraction were there initially, the introduction of a formal rule made them less salient and thus less able to influence behaviour. This is not to say that any imposed rule would automatically have the same effect; rather, it can be seen as ‘a warning towards indiscriminately intro- ducing regulatory intervention without a proper understanding of how it might undermine norms already operating in the field’ (Brousseau et al., 2012: 223).

Effects of Money and Markets on Social Norms, Preferences and Moral Values

However, not only badly designed regulatory systems have a negative impact on the social capital that sustains co- operation and contribution to public goods; markets and monetary valuation can lead to similar outcomes, through spill-over effects and changes in social norms and moral values. Spill-over effects are a type of crowding out that ex- tends beyond the initial area and thus affect motivation across a wider range of contexts. The effect does not only extend across domains (e.g. from social to environmental issues), but also across groups and communities, altering the motivational and attitudinal profile of group members and making them behave much more like self-interested agents (Frey and Jegen, 2001). In addition, commodification and monetization, along with the broader economic and sociopolitical processes that support and promote them, can end up undermining the non-utilitarian values and social capital that sustain public goods provision (Gómez-Baggethun and Ruiz-Pérez, 2011). It has been shown, for instance, that market interaction modifies the way subjects assess and value damage done to third parties (Falk and Szech, 2013). In a controlled experiment that compared individual decisions with decisions made in bilateral and multilateral markets, subjects were shown to have a higher willingness to choose money instead of avoiding to do harm when their decisions were market-based. Moreover, the willingness to accept harm was dramatically higher for multilateral markets (Falk and Szech, 2013). Another study argues that ‘money brings about a self- sufficient orientation in which people prefer to be free of dependency and dependents’ (Vohs et al., 2006: 1154) and can thus undermine other-regarding motivations. Taking this result as a validation of the Homo economicus model would simply ignore the fact that, in all cases, external intervention (through application of valuation methods such as willingness to pay or willingness to accept) is acting upon pre-existing norms and values. Treating some goods as monetizable and tradable can undermine the sense of intrinsic value, reciprocity and solidarity that was initially geared towards protecting them and maintaining them as public goods (i.e. non-excludable and non- rivalrous). Obviously, market mechanisms are not intrinsically pernicious to any form of cooperation for public goods provision. They can – and often do – coordinate social interactions and allocate scarce resources efficiently. The question is not whether to value value with money, but rather when, how and under what conditions to value with money (Kallis et al., 2013). Rather than taking monetary incentives as the default policy tool to be applied across contexts, participatory and transdisciplinary methods can be used to better represent the plurality of values and of ways of valuing public goods (Lang et al., 2012). Apart from offering insight into local knowledge systems and extra-scientific expertise held by various actors, such methods strengthen the sense of legitimacy and procedural fairness, thus facilitating policy implementation. Table 2 summarizes the key implications of the four points discussed above at the level of organization of scientific research and policy design for public goods provision.

Implications for Knowledge Production and Policy-Making

The dominant economic theory of motivations to contribute to public goods – and its associated policy model – is focused on aligning individual and public interest through extrinsic incentives and deterrents. In doing so, they of- ten misrepresent, overlook and under-utilize existing norms of reciprocity and trust, problem-specific institutional arrangements and non-instrumental values driving public goods provision, particularly in local contexts. As discussed in the previous sections, recent research in social psychology, behavioural and ecological economics, and institutional theory not only exposes the limits of RCE’s theory of motivations, but also suggests ways of revising

238 F. Popa

this theory to make it more consistent with empirical observations and more relevant and useful for policy-making. This revision, as I have argued above, has to start from RCE’s three key assumptions: instrumentalism, individual- ism and market equilibration. The present section draws two key implications of this criticism for the organization of scientific research and for the development of policies concerning public goods provision.

Transdisciplinary Research for Policy-Making

RCE’s technocratic policy model for public goods provision fails to integrate the different types of incentives, values and norms that influence motivations and determine the level of contribution to public goods. A non-reductionist approach that considers trust, reciprocity and intrinsic incentives along with instrumental, cost–benefit calculations can no longer rely exclusively on an expert-based model of scientific organization, in which professionals are as- sumed to produce value-neutral knowledge to be fed into the policy process (Dedeurwaerdere, 2014). Transdisciplin- ary approaches that integrate different types of expertise, from scientific and extra-scientific stakeholders, have been successfully applied to different problems of public goods provision (Lang et al., 2012; Yarime et al., 2012; Brandt et al., 2013). Such approaches involve stakeholders in a critical-deliberative process that questions the values, under- standings and norms that underlie subjects’ willingness to contribute to public goods. This questioning can offer not only a more comprehensive and nuanced description of the problem at stake, but can also lead to a collaborative �albeit not necessarily consensual �understanding of alternative ways towards problem resolution. Such a revised organization of the epistemic process rests on mechanisms of stakeholder participation that manage to actually transform values, practices and institutions, rather than just guiding participants through an expert-based consultative mechanism to legitimize a predefined agenda. These mechanisms ‘should be structured enough to generate and sustain collective action, yet flexible and inclusive enough to support genuine participation and, where necessary, challenge the status quo’ (Popa et al., 2015: 54).

Context-Specific, Flexible Policy Interventions

At the same time, the explicit acknowledgment of the social embeddedness of preferences, beliefs and incentives calls for a reflexive policy process that takes into account the entanglement of agency and structure in generating and sustaining contributions to public goods. Such a policy process is developed deliberatively with the relevant

Intrinsic incentives Context-specific regulatory and incentive schemes that sustain the mobilization and crowding in of intrinsic incentives. Shift from expert-led ‘technocratic fixes’ to adaptive management based on multi-stakeholder deliberation.

Social embeddedness of motivations Acknowledgment of pre-existing norms and values, as well as local institutional solutions, which facilitate contributions to public goods. Policies relying less on coercion and more on stakeholder empowerment, self-enforcement and self- monitoring of compliance.

Trust and strong reciprocity Attention to conditions under which top-down regulation and incentives systems crowd out or crowd in trust and social norms of reciprocity and solidarity. Alignment of external intervention with existing norms, values and practices that facilitate contribution to public goods.

Effects of money and markets on social norms, preferences and moral values

Acknowledgment of plurality of values and ways of valuing public goods. Improved knowledge of conditions under which market and non-market incentives are mutually reinforcing. Focus on minimizing the incidence of market-induced crowding out.

Table 2. Organizational and policy implications of the proposed reconsiderations to RCE’s theory of motivations

239Motivations to Contribute to Public Goods

stakeholders, for instance through citizens’ juries, social multi-criteria evaluation, consensus conferences or sce- nario planning (Gastil and Levine, 2005; McDonald et al., 2009; Garmendia et al., 2010).

The reductionist motivational theory of RCE and its lack of reflexivity on its own assumptions and value com- mitments risk imposing a narrow set of policy measures as a ‘cure-all’ solution to problems of contribution to public goods. In this way one ‘can become fixated on a low conceptual hill by trying to optimize specific vari- ables while overlooking better solutions involving ignored variables’ (Ostrom, 2007: 15181). RCE’s ‘imperialism’ in extending its assumptions and methods across contexts is tempered by a growing recognition of the limited representativeness of sample populations from which sweeping generalizations are often made about human na- ture (Henrich et al., 2010). Policy ‘panaceas’ fail because they unwarrantedly extend particular mechanisms and regulatory models from some contexts, where they may prove effective, to other contexts where they are clearly inappropriate (Ostrom, 2007). For instance, an analysis of PES policies concluded that ‘no single policy is right for every scenario’ and that PES is unlikely to ‘be able to simultaneously improve livelihoods, increase ecosys- tem services, and reduce costs’ (Jack et al., 2008: 9469). What is needed is a gradual improvement of cumu- lative capacities of diagnosis, taking into account the interdependencies and reflexive processes operating in social settings. Such an approach aims at identifying ‘conditions prevailing in specific situations that determine what combinations of strategies are likely to be most effective, most efficient, and most equitable from the perspective of society as a whole as well as in terms of the welfare of the individual members of society’ (Young, 2011: 68).

Conclusions

RCE’s theory of motivations, based on the assumptions of individualism, instrumentalism and market equilibra- tion, extends into a policy model for public goods provision that relies on technocratic intervention through external incentives and deterrents. This paper has considered the limitations of this theory and of its underlying policy model, and has argued for a deeper integration of intrinsic incentives, trust and reciprocity, social norms and mar- ket interactions in the analysis of motivations to contribute to public goods.

This critical analysis has two key implications. First, the modes of production of scientific knowledge, together with the institutional and normative settings that support them, need to better integrate transdisciplinarity and so- cial learning (Thompson Klein, 2004; Lang et al., 2012). This implies not only a procedural democratization of knowledge production (formal inclusion of stakeholders), but most importantly a more reflexive and deliberative stance towards the assumptions and values that shape the dominant perspective on motivations and public goods provision. Secondly, this calls for a context-based governance approach that mobilizes different types of stakeholder expertise and encourages social experimentation, rather than relying on predefined policy mechanisms that are sup- posed to work across contexts. Policy models that disregard the social and normative context in which they are op- erating, as well as the diversity of motivational drivers at play in public goods provision, have often proven counterproductive (Ostmann, 1998; Cardenas et al., 2000; Vollan, 2008; Kerr et al., 2012). It is high time Homo economicus were re-humanized, by acknowledging the diversity of motivational patterns that can generate and sus- tain contribution to public goods, and identifying the way they are influenced by – and influence in their own turn � different normative, institutional and policy contexts.

Acknowledgements

I gratefully acknowledge co-funding from the European Commission, under the contract of two EU research projects, BIOMOT (FP7 grant agreement 282625) and GENCOMMONS (ERC grant agreement 284) and co-funding from the Belgian National Sci- ence Foundation (MIS Incentive Grant on Governing Global Science Commons). I also want to thank the editors of this special issue and two anonymous reviewers for their valuable comments.

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