University of Bristol

Leverhulme Centre for Market and Public Organisation

Incentives in the Delivery of Public ServicesSimon Burgess

Oxford. April, 2004 www.bris.ac.uk/Depts/CMPO 2

Introduction• ESRC Programme very timely

– Main domestic policy priority– Intellectually exciting.

Oxford. April, 2004 www.bris.ac.uk/Depts/CMPO 3

Plan

• Concepts

• Issues

• Research Capacity

• Conclusions

Oxford. April, 2004 www.bris.ac.uk/Depts/CMPO 4

Concepts

Distinguish:

• Incentives for organisations– Benchmarking, league tables, basis of choice;

financial, earned autonomy, “warm glow”.

• Incentives within organisations– Performance pay, individual, team or

organisation; financial or not.

Oxford. April, 2004 www.bris.ac.uk/Depts/CMPO 5

What do incentives do?

• Incentives for organisations– Efficiency– Sorting, segregation, clustering – Responsiveness, innovation

• Incentives for individuals– Motivation – effort– Gaming, unintended consequences– Sorting - recruitment and retention

Oxford. April, 2004 www.bris.ac.uk/Depts/CMPO 6

Issues

• Incentives for organisations– Role of Choice, Competition– Organisational response– Raise efficiency and performance– Gaming, “cream skimming”, segregation– Erosion of public service ethos, demoralisation– Variations in service, equity

Oxford. April, 2004 www.bris.ac.uk/Depts/CMPO 7

Issues

• Incentives within organisations– Appropriate form– Effectiveness– Relationship with public service motivation– Relationship of form with bureaucracy –

observability, verifiability of outputs

Oxford. April, 2004 www.bris.ac.uk/Depts/CMPO 8

Research Capacity

• (talking principally about economics here)

• Theoretical development

• Empirical work:– Increased willingness to pilot/experiment– Access to new administrative datasets

• Chance to steal a march on US, and establish UK as leader

Oxford. April, 2004 www.bris.ac.uk/Depts/CMPO 9

• Much of this links across several disciplinary fields:– economics, education, geography, political

science, psychology, public administration, ...

• Links to several other issues:– autonomy and decentralisation, bureaucracy,

equity, clustering, …

Oxford. April, 2004 www.bris.ac.uk/Depts/CMPO 10

Conclusion

• Big questions

• Practical questions

• Links