Acting in the public interest – a framework for analysis - ICAEW

9. IMPLEMENTATION9.1 Carrot, stick or sermon9.1.1 MotivationIf a proposed action is considered to be in the public interest, it follows that it is for the publicbenefit that the action actually happens. Something will be more likely to happen if people aremotivated to undertake or at least support it.The first need in this respect is for the proposed action to be understood and agreed. It willhelp to reduce the risk of error if the proposition is clear and precise, able to withstand criticalreflection, consistent, and having consensus. 201The next requirement is for there to be a motivation to comply. Behavioural economicsrecognises that people do not necessarily behave rationally and are motivated by a variety offactors, considered below.The issue is exacerbated when the impact will be felt internationally: even where people aremotivated to do the ‘right’ thing’, different cultures tend to have different perspectives on whatthe ‘right’ thing to do is.9.1.2 Human natureFirst, self-interest. Hobbes noted that, unlike ants and bees, people do not behave sociably as anatural state of affairs. 202 This has been attributed to a number of factors:• a tendency to: compete for honour and dignity; desire pre-eminence; interfere to reformothers (but not themselves); use words to misrepresent; and imagine injuries when at rest. 203• reinforcing this is our ‘fallible reason, reinforced by passions, and our diverse abilities, whichare the source of property rights and which result in conflict’. 204• motivation by selfishness and greed for esteem, by self and others. 205Given that they exist, self-interest and ego have long been used as motivational tools to makepeople do what the public in general (usually through government) wants them to do. 206Whether people act in the interests of others through genuine concern or esteem could beconsidered to be irrelevant here, although from an aggregate qualitative perspective, egoism isa zero-sum game but self-respect creates humanity and virtue. 207In addition, human nature makes us prone to:• following herd instinct or ‘group think’; 208• a conservative tendency to stop while the going is good, or conversely keep ploughing onif doing badly; 209• being risk averse: we are more concerned to avoid small losses than make small gains,accepting a low probability of a high loss, but not vice versa. Similarly we will accept a highprobability of a low gain but not vice versa. This can cause insurance or safety nets to resultin moral hazard, as we adjust behaviour to our risk tolerance levels; 210• being, conversely, over confident in our own judgement; 211201Sidgwick, quoted in Schultz, ‘Henry Sidgwick’.202Quoted in Faulhaber, ‘The Rise and Fall of “Self Interest”’.203Hobbes, quoted in Faulhaber, ibid.204Madison, quoted in Faulhaber, ibid.205Mandeville referred to by Hundert, The Fable of the Bees and Other Writings.206Machiavelli, quoted in Faulhaber, ‘The Rise and Fall of ‘Self Interest’’.207Rousseau, quoted in Faulhaber, ibid.208Marnet, ‘History Repeats Itself: The Failure of Rational Choice Models in Corporate Governance’.209BBC News, ‘Hormones May Fuel Market Crises’.210Kay, The Truth About Markets.211Kay, ibid.62Implementation