Money Drives: Can Monetary Incentives based on Real-Time Monitoring Improve Driving Behavior?

This paper examines the effectiveness of monetary incentives based on real-time monitoring as means to improve driving behavior of company car drivers. We conducted a 5-months 60-drivers field study with one of the largest public transportation companies in Israel. Driving behavior was measured continuously using In-Vehicle Data Recorders (IVDR) that were pre-installed in the vehicles, enabling naturalistic, objective and concise measurements. The driving behavior measurements were then used to examine two different monetary incentive schemes: (1) a simple individual incentive scheme where each driver was rewarded based on his own improvement in driving behavior, and (2) a peer-reward scheme where each driver was rewarded based on the improvement of his peers. Drivers were also provided with daily feedback about their improvement and the reward they gained using text messages and a dedicated smartphone app. We find that the two incentive schemes presented an average improvement of 25% in driving behavior, whereas the control group (that did not use any monetary incentive) presented no improvement at all. Surprisingly and in contrast to the reported superiority of the peer-reward scheme in previous studies, we find the individual scheme to perform better in our setting (31% vs. 15% improvement). Finally, we find that the monetary incentive schemes were able to reduce fuel consumption significantly, suggesting that such incentives can serve as a sustainable mechanism for improving driving behavior in real-world applications.