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July 30, 2021

What's works best? The carrot or the stick?

This time of the year, just about all of France takes to their cars, caravans and motorcycles and head South for their vacation. The resulting traffic jams and heated exchanges do little to counter the commonly held view that France has some of the craziest drivers going.

But some officials hope that’s going to change.

Instead of scanning the road for bad drivers, however, traffic police are scanning one major route for motorists who are obeying the rules of the road, being courteous and managing to keep their cell phones out of their hands at the same time.

They're pulling over these good drivers at random and handing them gas vouchers worth more than 50 euros (around $60).

Will it work? Probably not, suggests Rags Srinivasan who writes the very clever Iterative Path blog

While French, and many other Europeans, go a little mad where their summer vacation is concerned, offering them cash is not going to get the job done.

When it comes to changing behaviour sticks are better nudges than carrots, he says. The gain of $60 gas voucher is not as intense as the pain from losing $60 (or more) to traffic tickets.

In the same way, hitting shoppers with a 5 cent charge per plastic bag is much more likely to get them to bring their own bags than if there were simply given a credit for each bag.

Decision making on these types of issues is influenced by three key elements: What’s it worth to me? Is it the right thing to do? Will I be punished somehow if I act this way?

Do you respond to the carrot or the stick? What does it take for you to change your behaviour? 

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...