Reward vs punishment: How humans respond to social incentives

'Sin tax', fines, loyalty points and commissions are a few examples of how desired behaviour can be driven through social incentives.

One of the basic components of a functional, cooperative society is a code of law, where the laws are usually enforced by some kind of incentive.

Social incentives can either be positive (rewards) or negative (punishments); and a society must decide which combination to use to achieve the greatest efficiency, or the highest level of cooperation at the lowest cost.

CapeTalk and 702 presenter Redi Tlhabi explores whether rewards or punishment are most effective in creating a cooperative society in South Africa.

Professor Chris Callaghan, Associate Professor in the School of Economic and Business Sciences (SEBS) at Wits University, says that it is always better to try and encourage good behaviour than punitive measures.

Behavioural economics literature shows that it is increasingly complex to answer questions about social incentives and group/individual decision making processes. It is difficult to generalise because we are all diffrent.

Professor Chris Callaghan, Associate Professor at SEBS

Callaghan says that values are the driving force behind the way individuals and groups respond to social incentives.

Listen to the full conversation from The Redi Tlhabi Show:

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