Mixed Signals: How Incentives Really Work
Uri Gneezy
320 pages, Yale University Press, 2023
In this excerpt from Mixed Signals: How Incentives Really Work, I share the story of the Maasai tribe and their long-standing tradition of lion killing, which is deeply rooted in their culture and economic survival. This lion-killing tradition led to the decline of the lion population in Africa and had a detrimental impact on the ecosystem and the economy.
One of the heroes of the chapter is Samson, a Maasai boy who is about to embark on a dangerous rite of passage by killing a lion with nothing but a spear. Luca Belpietro, the other hero of the chapter, is an Italian conservationist who established the Maasai Wilderness Conservation Trust. In collaboration with Samson, they designed a financial incentive-based program called the “Simba Project” to reduce the number of lion killings by the Maasai tribe. Traditionally, the Maasai response to a lion killing a cow is to call the warriors who would chase and spear the lion to prevent future attacks on livestock.
A good incentives design helps determine where the implementation of incentives would be most effective by considering the effect of incentives on each “player.” In the case of the Maasai, the players are the warriors and the elder, whose decisions affect each other’s payoff. Luca and Samson focused the Simba Project’s incentive scheme on the elders by changing their payoff from calling the warriors to reporting the incident to the Simba Project’s verifying officers. The Maasai elder whose cow was killed can be financially compensated under this project, but only if no lion is killed in the area following the incident. This incentivizes the elders to tell the warriors not to kill the lion, so they will be eligible for compensation.
This story is an example of how well-designed incentives should work by looking for places where pushing a little can change a lot.—Uri Gneezy
* * *
Killing a lion with nothing but a spear is quite dangerous, as you may imagine. Meet Samson—he’s about to do just that. Samson is a sixteen-year old Maasai boy, and this act is his rite of passage. It is how he will prove his bravery and prowess to his tribe and how he will become a warrior. He’s been preparing for this moment since a very young age, listening to Maasai bedtime stories of heroic warriors spearing formidable lions and saving their villages in the meantime.
You may be thinking that this all sounds just a bit dramatic, but it isn’t in the least—killing lions is central to Samson’s culture. The Maasai are a Nilotic ethnic group located in Kenya and Tanzania. They don’t have bank accounts or luxury cars; rather, all of their capital is invested in their livestock. Imagine a lion going after your bank account—would your attitude be cavalier? Just as you would probably go to great lengths to protect your financial well-being, the Maasai have good economic reasons to go after the lions that kill their cows and sheep and threaten their very livelihood.
At this point, you may also be wondering just how a professor at UC San Diego fits into this story. So let me just give a quick disclaimer: I did not spear any lions during my time in Kenya and Tanzania. I did, however, spend time with the Maasai, learning, among many things, how they were able to alter one of their long-standing traditions of the aforementioned lion killing.
When I mention wild lions, you may imagine them as killers that are eager to mix up their diet with the occasional chubby tourist or careless tribesman. But in reality, lions, like many animals, generally try to avoid humans. Lions will, however, attack livestock from time to time, often as a result of harsh environmental conditions, such as during a drought or when orphaned cubs are not strong enough to hunt wildlife on their own. When such an attack would occur on the Maasai’s land, Maasai warriors would chase and spear that lion, for the most part to prevent it from attacking livestock again. The Maasai and the lions have lived in this equilibrium for hundreds of years.
However, over the past few decades, economic development has drastically reduced Kenya’s lion population, and the Maasai lion-killing tradition hardly helped matters. In 1928, Kenya’s population was a mere 2.9 million people; over the next century, it multiplied over sixteen times: in 2019, the population was over 52 million and growing. Naturally, economic development followed this population growth, and the combination resulted in a loss of natural habitat, further crippling the lion population. At the present time, only an estimated twenty thousand wild lions remain in Africa, down from about two hundred thousand thirty years ago.
This decline in the lion population is detrimental for many reasons, the first of which is simply the loss of these magnificent animals that have done so much to forge Kenya’s international image. Additionally, as with any endangered species, the dwindling lion population has disturbed the balance in the food chain. There is the economic perspective to consider as well: lions are key to the tourism industry in Kenya and have produced great economic benefits. When the lion population started declining, some people wondered, Could incentives be used to change the Maasai lion killing tradition, which itself was rooted in the economic need to save their livestock?
On the flight to Kenya, my friends and I discussed this question, and we were all excited to meet the people who had grappled with this difficult situation firsthand. A small Cessna departing from Nairobi took us to our final destination in southern Kenya, next to Tanzania. Upon landing, we met Luca Belpietro, an energetic Italian with a can-do attitude. Born and raised in northern Italy, Luca first went to Africa as a kid with his father, an avid big-game hunter (an interesting background for someone who grew up to be an adamant conservationist). In 1996, Luca and his wife, Antonella Bonomi, founded Campiya Kanzi, an ecotourism lodge on a Maasai-owned wilderness reserve with Mount Kilimanjaro and Ernest Hemingway’s “green hills of Africa” as a stunning backdrop.
We headed toward the main building of this “Camp of the Hidden Treasure” to join Luca for dinner. Leaning on the fireplace with a glass of grappa in his hand, Luca told us how, as a young teenager, he built a tent outside his family’s house in Italy and took up residence inside it in order to convince his father that he was ready to join him on his African expeditions.
It was during these expeditions that Luca fell in love with Kenya and eventually chose to permanently relocate to the Maasai land, where he and his wife have since built their home and their life together. Their children attend school with Maasai children, and their best friends are tribespeople. Yet, when asked about his relationship with the Maasai, Luca replied, “It is still developing. The Maasai world is one of its own; if you were not born a Maasai there are no doors for you to enter it. I am glad some windows open for me to look into it once in a while.”
Luca isn’t one to just sit back and wait patiently for windows to open, though. Ever the activist, with full respect for and understanding of the Maasai traditions, Luca established the Maasai Wilderness Conservation Trust to help the community. Employing more than three hundred members of the Maasai tribe, the Trust is dedicated to preserving the wilderness, the Maasai land, and the culture. Its most famous supporter is the actor Edward Norton, who fell in love with the people and the place and started a US-based arm of the Trust. Norton invited a few Maasai to join him in running the New York City Marathon to help increase the Trust’s visibility. One of the runners was Samson Parashina, the boy you met at the beginning of this chapter. Now thirty-seven and definitively no longer a boy hiding in the grass with his spear, he stood comfortably near Luca, explaining in fluent English how the two of them had met.
While Samson was training to become a Maasai warrior, he also worked as a waiter at Luca’s lodge restaurant. Like his peer warriors-to-be, he trained in using his spear to protect livestock and to kill lions if necessary. At the same time, however, he was learning about management as he made his way up the ranks at the lodge. With this East-meets-West experience in hand, he went to study at a university in Nairobi to further his education. Seeing his potential, Luca appointed him to manage the lodge upon graduation, and later, Samson also became the president and chairman of the Trust’s board.
Samson explained to me that one of his first tasks in this role was to find a solution to the drastic decrease in the lion population. In the Kuku ranch, where the lodge was located, the lion population was down to just ten when Samson was appointed. In the neighboring lands, the lion population was barely hovering at seventy, down from over three hundred only a decade earlier. Although encroaching developments accounted for some of the loss, the Maasai were responsible for the other part of the problem. More than one hundred lions were killed by the local Maasai in just the start of 2000, and this trend continued. To address this decrease in the lion population, Luca and Samson put their heads together and designed the “Simba Project” (simba means “lion” in Swahili), a financial-incentives-based program.
Traditionally, when a lion kills a cow, the elder who owned the livestock would call the warriors, who would then gather to chase and spear the lion. Although this response doesn’t compensate the elder for the dead cow, it does succeed in preventing future attacks on livestock by that lion. The Simba Project is an incentive scheme targeted at the elders who own livestock and was designed to change this dynamic, which was decreasing the lion population.
Luca and Samson explained that under the Simba Project, the Maasai elder whose cow was killed can be financially compensated, but only if no lion is killed in the area following this incident.
This incentive scheme changed the reality that the elders faced. In this new reality, if an elder calls the warriors and they chase and kill the lion, the elder is not compensated. Meanwhile, if the warriors do not kill the lion, the elder is eligible for compensation. You can thus begin to see how under the Simba Project, the elder is incentivized to tell the warriors not to kill the lion. Livestock losses due to conflict with other wild animals (e.g., hyenas, leopards, cheetahs, and wild dogs) are also eligible for monetary compensation under the Simba Project. The inclusion of these other animals under the compensation plan is important for solidifying the norm of not chasing predators and keeping the food chain balanced.
Simply put, the lion kills a cow, and the elder has to decide whether to call the warriors. If he decides not to, the outcome for him is not great: he’s down one cow, and the lion may come back for another. If he calls the warriors and they kill the lion, he’s still down one cow; but the lion will not come back, and the risk of losing another cow is reduced. For the elder, the second outcome is better than the first, and hence the elder will call the warriors.
This analysis helps us determine where in the process the implementation of incentives would be the most effective by allowing us to consider what the incentive’s effect on each “player” would be. The players consist of the warriors and the elder. Note that they don’t compete with each other, but each one’s decision still affects the other’s payoff. The elder’s payoff is the life of his remaining livestock, and the warrior’s payoff is the rite of passage achieved through the process of hunting and killing lions; now he can become a member of the warrior club.
Luca and Samson decided to focus the Simba Project’s incentive scheme on the elders by changing their payoff from calling the warriors. They created a more attractive alternative. In a community meeting, Samson told the elders about the incentive scheme: if the elders refrained from calling the warriors and instead reported the incident to the Simba Project’s verifying officers, they would receive compensation for their dead cow. The lion would stay alive, and in the event that it wanders back and kills another cow, the elder would be compensated for that cow as well.
As Samson explained the program during that first community meeting, Luca saw the elders’ initial looks of confusion and headshakes turn into signs of understanding and acquiescence, as one by one they began to nod their heads. After the elders left the meeting, Luca and Samson both pondered the same question: Would the incentive be enough to change the elders’ behavior and the tribe’s long-standing tradition?
An important decision in making the plan work is how much to pay. If the Simba Project were to offer a ridiculously large amount, say, $1 million, to each elder who refrained from calling the warriors, it would undoubtedly work. After all, who would say no? However, the project would be bankrupt with the first dead cow, and the problem would persist. Instead, the Simba Project considers the market value of the livestock in question and compensates based on that amount. Compared to the economic benefit that tourism involving the lion population brings to the Maasai, the compensation seems to be a manageable price to pay. This financial calculation is extremely important because it makes the project economically sustainable. Luca explained that the project is fully funded by the guests of his Campiya Kanzi lodge, who pay additional taxes on their lodging expenses, which are in turn diverted toward compensation for livestock losses due to predator attacks. In other words, the tourists who come to the lodge to experience the wilderness are simultaneously helping to fund the program that preserves it.
TAKEAWAY: Incentives can change the culture by changing the payoffs.