The effect of ‘smart’ financial incentives on driving behaviour of novice drivers

Abstract

Recent studies have demonstrated that financial incentives can improve driving behaviour but high-value incentives are unlikely to be cost-effective and attempts to amplify the impact of low-value incentives have so far proven disappointing. The present study provides experimental evidence to inform the design of 'smart' and potentially more cost-effective incentives for safe driving in novice drivers. Study participants (n = 78) were randomised to one of four financial incentives: high-value penalty; low-value penalty; high-value reward; low-value reward; allowing us to compare high-value versus low-value incentives, penalties versus rewards, and to test specific hypotheses regarding motivational crowding out and gain/loss asymmetry. Results suggest that (i) penalties may be more effective than rewards of equal value, (ii) even low-value incentives can deliver net reductions in risky driving behaviours and, (iii) increasing the dollar-value of incentives may not increase their effectiveness. These design principles are currently being used to optimise the design of financial incentives embedded within PAYD insurance, with their impact on the driving behaviour of novice drivers to be evaluated in on-road trials.

New Directions for Data-Driven Transport Safety

“…Pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD) are different UBI schemes whose premiums are affected by how much a vehicle is driven or how well. Offering monetary rewards for safer driving behaviours has a positive effect on behaviours, as suggested by Greaves and Fifer (2011), Reagan et al (2013) and Mortimer et al (2018). In turn, safer driving is expected to result in a lower number of fatal and serious crashes.…”

Loss-Framed Adaptive Microcontingency Management for Preventing Prolonged Sedentariness: Development and Feasibility Study

“…In addition to the prevention of gaming behavior, another reason for using the loss-framed incentive is that the loss-framed incentive is more likely to elicit behavior change than the gain-framed incentive because of people’s tendency to place a greater emphasis on losses than gains, as stated by the prospect theory [ 43 ]. In practice, previous studies have demonstrated a better effect of the loss-framed incentive on health outcomes than the gain-framed incentive in a variety of intervention domains, including mitigating smartphone overuse [ 23 ], promoting physical activity [ 35 ], and improving driving behavior [ 26 ].…”

“…Another aspect of incentive design that should be considered is the delay between behavior occurrence and incentive delivery, with a shorter delay having shown greater effectiveness in eliciting behavior change [ 18 , 33 ]. Other potential contributors to the effectiveness of contingency management include incentive framing (eg, providing incentives for positive behaviors vs deducting expenses for negative behaviors) [ 23 , 26 , 34 , 35 ], incentive magnitude adjustments throughout the intervention [ 20 , 34 , 36 , 37 ], and incentive magnitude certainty (eg, fixed vs lottery incentives) [ 4 , 12 , 38 ].…”

The Role of Insurance Companies to Road Traffic Safety in CAMEROON

“…[4] Creative insurance policy could have an impact on safety in conjunction with its design. [7] This may also have a major impact. Pay-as-you-drive schemes (PAYD) and the pay-how-you-drive (PHYD) are covered in insurance plans focused on vehicle use (UBI) with potential upcoming versions on PAHYD [8].…”

“…In addition to the activities followed by many insurance firms, research conducted by several scholars shows that insurance companies could also be interested in road safety through insurance schemes such as Travel actions and insurance driver-based behaviour [7]- [9]. Pricing of driving incentives [10/12].…”