Incentives can affect behaviour

Today I talked to my students about how incentives can influence health behaviour.

Since we were talking about health economics this semester, one of the key principles to remember when studying basic economics is that incentives can promote behaviour. The basic definition of incentives here is that it is a reward or a punishment that induces or encourages someone to act.

While we talked about the Free health care policy here in PNG as an incentive for Papua New Guineans to access health services, we can also learn from other countries in how they respond to incentives.

Take for instance, the case of the Baby Bonus in Australia.

 In the decade of 2004 and 2014, the Australian Government made payments to parents of for every baby born. These payments were known as the ‘baby bonus’. The bonus ranged in value of $3,000 to $5,437 for every baby born. If Australia dollar is converted to PNG kina, the baby bonus of $3,000 (K7,350) to $5,437 (K13,320) for every baby born.

In May 2004, the Treasurer, Peter Costello, announced that the payment of for every child born would only happen after July 1.

We can see here that Australians began to delay the birth date of their child to coincide with the Government’s planned baby bonus!

This is just one of multiple examples of how incentives can work to influence people’s behaviour.

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