20 Sep 2010

Intrinsic motivation

My paper, Save the poor, shoot some bankers was just published in Public Choice.

Abstract: Bilateral or multilateral organizations control about 90% of official overseas development assistance (ODA), much of which is wasted. This note traces aid failure to the daisy chain of principal-agent-beneficiary relationships linking rich donors to aid bureaucrats to poor recipients. Waste results when aid middlemen (un)intentionally misdirect ODA. Waste can be reduced by clarifying domestic goals for ODA, using fewer middlemen with greater intrinsic motivation, empowering recipients, and/or replacing bureaucracy with markets.

The key concept in this paper is "intrinsic motivation," the idea that people do the right thing because they want to, not because they are told to do so or are paid to do so. (For more, listen to this podcast with Daniel Pink.)

Intrinsic motivation is important in water, because managers rarely face oversight while acting or punishment for failure.

Sometimes, managers fail us.

In Pasadena,
The board voted to award itself more perks by approving - on a 3-2 vote - giving each member a credit card.

This kind of move not only is a slap in the face to a public clamoring for cities and water districts to stop wasting taxpayer and ratepayer dollars, but it proves the point. These agencies exist above the fray, often independent of public input, making decisions for their own benefit.
In Israel (via TS),
WILL CHARGING more for water now make us consume less? Only up to a point. Israelis are used to overpaying.


The availability and affordability of a commodity so indispensable mustn’t become an unsanctioned revenue-generating tool for any government agency, and certainly not a means to cover up officialdom’s egregious failures.

Facile price hikes don’t encourage the public sector to clean up its act. Local authorities in particular are hardly innocent. Their negligence accounts for a whopping 165 million cubic meters lost annually because of substandard municipal equipment or leakages from corroded pipelines.
Bottom Line: Good people can make our lives better, but people who care more about themselves than us can make us all worse off, whether we are in Pasadena, Tel Aviv, Las Vegas, New York, Moscow, Johannesburg, or... The solution is not warnings, education or dialogue. The solution is to shoot fire them.


  1. Re: the Israelis being getting used to paying more for water. Is that a bad thing?

    There is nothing intrinsically bad about using a lot of water if: (1) it is available (2) you are prepared to pay more for the water than competing users, and (3) the environmental and other externalities are included in the price.

  2. On Kiva you can directly loan capital ($25 - $???) to third world Entrepreneurs. Most pay you back, but some don't or can't. I feel this puts aid on a person to person level that cuts out layers of bureaucrats and government "waste". http://www.kiva.org/about/how


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