.

  • Written by Liam Lenten, Senior Lecturer, Department of Economics and Finance, La Trobe University

If you want to know how bonus schemes can come unstuck, take a look at the Rugby World Cup

It’s inching its way towards the end of the group stage in Japan, where Australia takes on Georgia tonight. The bonus points on offer are of considerable interest to economists and may help determine who gets into the quarter-finals and who ultimately wins.

Unlike most sports tournaments, rugby tournaments have point systems that include “bonus” points for achievements within the game other than simply winning.


Read more: Rugby World Cup: teams could progress by deliberately conceding points


A narrow-loss bonus gives one point to the match loser if its margin of loss was seven points or fewer – the idea being that an extra converted try would have given the loser a different result.

The rule dates back to New Zealand’s elite domestic league in 1986, then known as the National Provincial Championship.

It was carried over into Super Rugby when it began in 1996.

As well as narrow-loss bonuses, there are try bonuses, which have a similar history.

The standard try bonus – as used in this World Cup – is one extra point for scoring four or more tries, and can be earned by both teams (Super Rugby adopted a modified “net try” bonus in 2016).

The intention is to encourage more attacking rugby and higher scores, and also to explicitly reward tries rather than drop goals and penalty conversions.

Do bonuses work?

Together with Irish co-authors Robert Butler (University College Cork) and Patrick Massey, I set about putting these bonuses to the test.

We modelled data from the European Rugby Championship, Super Rugby’s northern hemisphere equivalent, which ran for several seasons without bonuses, before introducing them in 2003-04, allowing us to compare before and after games.

Our primary interest was the try bonus. Narrow-loss bonus effects are harder to isolate.

In research to be published in the Scottish Journal of Political Economy, we report that the introduction of the try bonus was effective in increasing the likelihood that teams would score four tries in a match (which is an above-average number).

The effect was concentrated on home teams, which given the advantages they already enjoy are more often in a position to go for the bonus. It would appear to lend support for the view that the rule (or policy, in economist-speak) had achieved what it was meant to.

There’s a catch

But not so fast. We also found a significant reduction in teams scoring five or more tries.

That’s right, a reduction.

We believe it was driven by teams reducing their attacking effort once the bonus had been secured, as a large share of teams that score a fourth try already have a comfortable lead, and it is generally late in the game.

It means that, on balance, the evidence in favour of bonus points achieving their aims is mixed. At best they achieve something, at worst they are counterproductive.

This is especially so when it is considered that average scores actually fell by about 15% in the seasons where bonuses applied, although that might have happened for other reasons.


Read more: Confiscate their super. If it works for sports stars, it could work for bankers


The findings have important parallels.

Think of the banking royal commission where it was revealed that bank employees opened children’s bank accounts without their consent in order to claim bonuses.

More egregiously, they signed up customers to insurance and financial products to which they were manifestly unsuited.

The point is not that the bonus schemes were ineffective. They were very effective, although often not in serving the needs of customers.

Incentives matter, and they matter so much that it is important to get them right. As good starting point is making clear the design of the incentive schemes, as happened in rugby but not in banking.

For better of worse the results will be on display tonight. Go Wallabies!

Liam Lenten does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Authors: Liam Lenten, Senior Lecturer, Department of Economics and Finance, La Trobe University

Read more http://theconversation.com/points-for-tries-the-rugby-world-cup-shows-how-bonus-schemes-can-come-unstuck-124892

71% of Businesses Believe the 2019 Holiday Season Will Boost Sales

As the holiday season approaches, businesses both online and on the high street are thinking about their profit margins. The winter of  2018 saw more cash spent on gifts than ever before, bu...

News Company - avatar News Company

Vital Signs. Might straight down the middle be the source of our economic success?

Australian roads are straight, as has been the trajectory of our economic policy for more than 30 years. ShutterstockWhat do a billionaire, a former vice president, and a US democratic socialist have ...

Richard Holden, Professor of Economics, UNSW - avatar Richard Holden, Professor of Economics, UNSW

Research funding announcements have become a political tool, creating crippling uncertainty for academics

There’s a lot of uncertainty in a research career. Most funding – and most jobs – are doled out by the project, or in chunks of a few years at a time. Recently, however, the situat...

Jodie Bradby, Professor of Physics, Australian National University - avatar Jodie Bradby, Professor of Physics, Australian National University

Friday essay: shaved, shaped and slit - eyebrows through the ages

In ancient China, India and the Middle East, the art of eyebrow threading was popular. It is now enjoying a resurgence. www.shutterstock.comEyebrows can turn a smile into a leer, a grumpy pout into a ...

Lydia Edwards, Fashion historian, Edith Cowan University - avatar Lydia Edwards, Fashion historian, Edith Cowan University

Is your teen off to schoolies? Here's what to say instead of freaking out

Schoolies is a rite of passage for many Australian teenagers as they finish their exams and leave school. But are you prepared? from www.shutterstock.comFor many parents whose teenage children are com...

Stephen Bright, Senior Lecturer of Addiction, Edith Cowan University - avatar Stephen Bright, Senior Lecturer of Addiction, Edith Cowan University

Public places through kids' eyes – what do they value?

One nine-year-old chose his local supermarket as a place he valued because he could "spend time with mum and help decide what goes in our trolley". ShutterstockChildren are too rarely asked their pers...

Fran Gale, Senior Lecturer, Social Work and Community Welfare, School of Social Science and Psychology, Western Sydney University - avatar Fran Gale, Senior Lecturer, Social Work and Community Welfare, School of Social Science and Psychology, Western Sydney University

New research shows Chinese migrants don't always side with China and are happy to promote Australia

Australian media coverage of China can feel alienating to Chinese migrants, but most still hold a positive view of their adopted country. Lukas Coch/AAPThe Australian government has indicated that &ld...

Wanning Sun, Professor of Media and Cultural Studies, University of Technology Sydney - avatar Wanning Sun, Professor of Media and Cultural Studies, University of Technology Sydney

Australia must engage with nuclear research or fall far behind

Nuclear power will likely remain part of the global energy mix. ioshimuro/Flickr, CC BY-NCMuch is made of the “next generation” of nuclear reactors in the debate over nuclear power in Aus...

Heiko Timmers, Associate Professor of Physics, School of Science, UNSW Canberra, UNSW - avatar Heiko Timmers, Associate Professor of Physics, School of Science, UNSW Canberra, UNSW

Grattan on Friday: When the firies call him out on climate change, Scott Morrison should listen

When five former fire chiefs held a news conference on Thursday to urge the federal government to take more action on climate change, it was a challenging moment for Scott Morrison. Those who fronted...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

Pro-Tips Every First-Time Homeowner Need To Know

Buying your first home can be overwhelming. Everyone knows the struggle it takes to own a home. And these troubles can further be escalated if you decide to construct your first home from scratch. W...

News Company - avatar News Company

Virtual tools, real fires: how holograms and other tech could help outsmart bushfires

In many countries including America, computer models are being used to predict how a fire will burn. Author providedAustralia continues to experience unprecedented destruction from bushfires. Now is t...

David Tuffley, Senior Lecturer in Applied Ethics & CyberSecurity, Griffith University - avatar David Tuffley, Senior Lecturer in Applied Ethics & CyberSecurity, Griffith University

Alison Croggon and the arts critic as an endangered species

The work of a first-rate critic can be as important to our appreciation and understanding of a work of art (or performance) as the immediate experience itself. ShutterstockReview: Platform Papers 61: ...

Peter Tregear, Honorary Principal Fellow, University of Melbourne - avatar Peter Tregear, Honorary Principal Fellow, University of Melbourne

Politics with Michelle Grattan: Minister David Littleproud on bushfires, drought, and the Nationals

Bushfires continue to burn across NSW and Queensland, the death toll has risen, and the damage to properties, wildlife and the environment is devastating. With conditions predicted to worsen over the ...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

How we plan for animals in emergencies

Residents evacuate themselves and their animals to a park in Old Bar, NSW, Saturday, November 9, 2019. AAP Image/Darren PatemanAnimals are desperately vulnerable to natural disasters. An estimated 350...

Ashleigh Best, PhD Candidate in Law, University of Melbourne - avatar Ashleigh Best, PhD Candidate in Law, University of Melbourne

If Dr Google's making you sick with worry, there's help

Your twitching eye is more likely to be due to staring at a screen for too long rather than some serious illness. from www.shutterstock.comIt’s a busy day at the office and your left eye has bee...

Jill Newby, Associate Professor and MRFF/NHMRC Career Development Fellow, UNSW - avatar Jill Newby, Associate Professor and MRFF/NHMRC Career Development Fellow, UNSW

Why do many people with Parkinson's disease develop an addiction? We built a virtual casino to find out

We knew people with Parkinson's disease were at heightened risk of developing addictive behaviours like gambling. Our research gives insight into why this is. From shutterstock.comParkinson’s di...

Philip Mosley, Research Fellow, Systems Neuroscience Laboratory, QIMR Berghofer Medical Research Institute - avatar Philip Mosley, Research Fellow, Systems Neuroscience Laboratory, QIMR Berghofer Medical Research Institute

Up the creek: the $85 million plan to desalinate water for drought relief

The deal to crank up Adelaide’s desalination plant to make more water available to farmers in the drought-stricken Murray-Darling Basin makes no sense. It involves the federal government paying...

Lin Crase, Professor of Economics and Head of School, University of South Australia - avatar Lin Crase, Professor of Economics and Head of School, University of South Australia

12 simple ways you can reduce bushfire risk to older homes

There are no guarantees in bushfires, but you can improve the odds your house survives a blaze. Photo by Edward Doody, courtesy of Arkin Tilt Architects, Author providedSeventy-five years of Australia...

Douglas Brown, Casual Academic, Western Sydney University - avatar Douglas Brown, Casual Academic, Western Sydney University

Robots with benefits: how sexbots are marketed as companions

Sexbot Emma, from AI Tech, is advertised as a "real AI you can talk to". She offers "warm hugs" and will "feel your feelings". YouTube/ScreenshotWhen thinking of sexbots, companionship might not be th...

Fiona Andreallo, Lecturer in digital culture, University of Sydney - avatar Fiona Andreallo, Lecturer in digital culture, University of Sydney

Sick and Tired of Your Dead End Job? Try Teaching!

Tired of the same old grind at the office? Want an opportunity to impact lives both in your community and around the world? Do you love to travel and have new experiences? Teaching English is the perfect job for you! All you need is a willingness to ...

News Company - avatar News Company

The Impact of an Aging Population in Australia

There’s an issue on the horizon that Australia needs to prepare for. The portion of elderly citizens that make up the country’s overall population is increasing, and we might not have the infrastructure in place to support this. Australians h...

News Company - avatar News Company

LifeStyle

How to Make Your Girlfriend’s Birthday Extra Special

Your girlfriend’s birthday is your opportunity to show her how much you care. But how exactly do...

A Guide to Building Your Kid’s Confidence

As your child grows, confidence is key. Having low self-esteem as a child can have a detrimental e...

3 Hacks that Will Extend the Life of Your Hair Extensions

Everybody has the right to enjoy beautiful, long hair, including you! If you’ve always heard a...

Lessons in Empathy for Children

The ability to be able to understand and share the feelings of a fellow human being – empathy ...