Returning to Fundamentals: Insights of Neuroeconomics for Economic Foundations of Performance-Related Pay in the New Public Management
Type
presentation
Date Issued
2007-05-19
Author(s)
Helmuth, Utz
Abstract
Besides other influences some major theoretical fundaments of the New Public Management (NPM) movement can be found in the schools of institutional economics and public choice theory. Based on the idea that rational and self-maximizing bureaucrats behave in their own interest rather than in those of political leaders (rent-seeking), incentive structures had been designed to bring both sides together. Over the years authors tried to customize these eco-nomic ideas to the needs of the public sector. However only few research in public manage-ment deals with the question whether these economic fundamentals are still up-to date in the economic scientific community. This paper discusses some recent findings in established ex-perimental economics, where researchers observe the actual behaviour of individuals in eco-nomic laboratory situations, as well as in upcoming neuroeconomics where researchers use new neuroscientific methods to analyse economic behaviour and focus on the question of how these findings might have an impact on performance-related pay in NPM theory.
Among those findings covered are
- Intertemporal choices
- Fairness concerns
- Altruistic Punishment
These results concerning social behaviour are contrasting the neoclassical theory-based rec-ommendations of public choice theory as competition among bureaucracies and performance related salary. The paper proposes to integrate these findings in the NPM theory and to revise established compensation schemes.
Among those findings covered are
- Intertemporal choices
- Fairness concerns
- Altruistic Punishment
These results concerning social behaviour are contrasting the neoclassical theory-based rec-ommendations of public choice theory as competition among bureaucracies and performance related salary. The paper proposes to integrate these findings in the NPM theory and to revise established compensation schemes.
Language
English
Keywords
Performance-related pay
monetary incentives
New Public Management
Neuroeconomics
HSG Classification
contribution to scientific community
Refereed
No
Event Title
1st International and Interdisciplinary Scientific Confererence on Merging Physical Sciences, the Humanities and Social Science: FIHUSO 2007
Event Location
Kaunas, Lithuania
Subject(s)
Division(s)
Eprints ID
43822