Increasing active transportation is both a health and environmental policy priority in many European countries. Transport choices have a large impact on our life and on the environment, hence behaviour change in this direction can provide large societal benefits. Understanding which incentive works best is extremely important since transport behaviour is heavily habit dependent. A vast body of research can be found on the psychological determinants of mode choice and on the effectiveness of economic instruments. However, there is a lack of controlled studies combining the two literatures and that can disentangle how different measures work in the field.
This study tests people’s responsiveness to different incentive schemes for cycling using an innovative app tracking technology. In particular, we run a Randomized Controlled Trial (RCT) in the field to test whether monetary incentives can increase people’s cycling frequency and distance. Tax exemption or payment schemes are already used to stimulate cycling in some countries such as the Nederland, France and Belgium. In Norway, the socialist party suggested in 2015 to implement measures where cyclist and pedestrian can deduct part of their taxes based on how many Km they cycle or walk. The suggestion is appealing, but it presents challenges on how to document activity and for the national budget.
Insights from behavioural economics paired up with new mobile app sensing technologies such as Sense.Dat can give us the right tools to approach the problem. From Kahneman and Tversky (1979) seminal paper on prospect theory, we learn that people tend to overweight small probabilities and that they are attracted to lotteries with low probabilities and high rewards. Hence, we hypothesize that a well-designed lottery could work as well as, or better than a small incentive for all. Another advantage of the lottery is that it would be a much cheaper measure than tax deduction.
When implemented correctly, RCTs are the most rigorous way of determining whether a cause-effect relation exists between treatment and outcome. This experiment provides a causal relationship between the type of incentive and amount of cycling. In particular, we compare the effect of a riskless and flat rate incentive for all, with the possibility for few to win a large sum of money through a lottery. Moreover, we draw from recent literature and include Regret Aversion in one treatment.
Results are in line with the hypotheses. Compared to a control group, payment of a flat rate to everyone and the possibility for few of winning a lottery resulted in a significantly increase in cycling activity (measured in both Km cycled and amount of days with non-zero cycling activity). Our results show that the strongest effect is found in the “pay per km” treatment, where we register 45% km increase, and in the Treatment with regret aversion with 36% increase.