Viw Magazine

Men's Weekly

.

  • 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

VR Training in Australia – Conflict Resolution Training For Employees

In today’s rapidly evolving workplaces, Australian organisations are turning to immersive learning tools like VR to handle specialised n...

Financial Planning For Couples

Why Every Couple Should Talk About Money And A Will (Before It’s Too Late) When you’re in a new, exciting relationship, it’s easy t...

Navigating Relationships While Living with Depression

Living with depression can feel like carrying an invisible weight—one that not only affects how you experience the world but also how yo...

Choosing the Right Vinyl Flooring Suppliers for Your Home or Business

When it comes to selecting flooring options that combine durability, style, and affordability, vinyl flooring stands out as a top choice. ...

Why Food Manufacturing Cleaning Services Are Essential for Safety and Quality

The complexity of food production environments demands specialised cleaning approaches that go beyond regular janitorial work. This is whe...

The Importance of Choosing the Right Industrial Electrician Melbourne for Your Business

When it comes to powering large-scale operations and complex machinery, commercial electrical services are not enough. Industrial environm...

What to Expect During a Property Settlement After Separation

Separation is a challenging and emotional time, and one of the most complex aspects can be the division of property. However, understandin...

Designing the Ideal Healthcare Environment with a Professional Medical Centre Fitout

When it comes to healthcare spaces, functionality, hygiene, and patient comfort take top priority. An intelligently designed medical centr...

Stay Comfortable Year-Round with Ducted Cooling Melbourne

When the temperature starts to rise, having a reliable and efficient cooling system becomes a priority. With unpredictable weather and sud...

Best Practices for Content Ownership and Tagging Across Departments

Image by kaboompics on Freepik The bigger and more complex content ecosystems grow, the more valuable ownership and tagging become. In ent...

Understanding Public Liability Insurance Australia: What You Need to Know

Image by rawpixel.com on Freepik The necessity of public liability insurance in Australia is that it acts as a financial safeguard for busi...

How HID Proximity Cards Improve Workplace Security Without Slowing Down Access

In today’s workplaces, security is non-negotiable, but so is speed. Companies are under pressure to protect their people, property, and ...

Unlock Business Insights Faster with Power BI Tools

In this digital age where data drives the consumer landscape, businesses are shipping huge amounts of data every day. To remain competit...

Why Split System Installation Is a Smart Choice for Home Climate Control

Temperature control is essential for comfort, and when it comes to efficient, versatile cooling and heating, a split system is one of the ...

What You Need to Know About SMSF Setup in Australia

Setting up a self-managed super fund (SMSF) is becoming an increasingly popular choice for Australians who want more control over their re...

The Ultimate Guide to Door Replacement: Everything You Need to Know

Image by freepik Sure, swapping out a door is a fairly easy task, but it requires careful consideration of options for materials, designs...

Common Web Development Issues Perth Businesses Face (and How Agencies Fix Them)

Image by freepik Let's be honest, in the bustling heart of Perth's business scene, a website that's not up to scratch is like trying to he...

Life With Clear Aligners: 10 Small Changes That Make a Big Difference

Image by tonodiaz on Freepik Clear aligners have transformed orthodontics, offering a nearly invisible way to straighten teeth without the...

Choosing the Right Hair Loss Treatment for Your Needs

Millions of people experience hair loss globally, and it can be a major cause of emotional discomfort and self-consciousness. Hair loss ca...

Cardboard Display Boxes: An Effective Solution for Retail Presentation

In the competitive world of retail, how products are presented can be just as important as the products themselves. Cardboard display boxe...