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2

CHAPTER

Productivity

“So hot, so hot,” grumbled Ah Mah at Singapore’s sweltering heat. “I never remember Singapore to be so hot. Last time when I was young, I could wear long-sleeve blouse when going out. Now I cannot tahan (tolerate) the weather. I perspire so much even when I’m wearing my short-sleeve cotton blouse. Singapore is getting too warm for me.”

“It’s because you are older now. And fatter too. More fat means more insulation. So you feel warmer,” joked Ah Kong. He thought his wife had been pampered by the air-conditioned comfort since shutting their windows to block out the noise from nearby construction.

Truth be told, he also shared the same sentiment as his wife. Singapore is getting hotter.

And he knows this from the walks he makes bringing his grandson to school. Every morning, Ah Kong and Ah Mah will bring Ethan to his kindergarten. The morning walk is quite pleasant. They call it ‘exercise’ and it gives them time alone with Ethan, talking to him about school and his friends. But it’s the walk back in the afternoon when they bring Ethan home that is unbearable under Singapore’s enervating heat. Ah Kong and Ah Mah would feel quite spent.

Wiping beads of perspiration off their forehead, they would then head to the cool air-conditioned comfort afforded by the nearby community centre. This saves them from incurring air-conditioning expenses at home.

“I’ve got to make more cooling tea for the family. Liang teh is good, especially for Teng since he’s driving around so much. The cool tea will balance the heatiness from this kind of weather. Remember to remind me to buy ingredients from the Chinese medicine shop on our way home,” Ah Mah told Ah Kong.

Air Pollution and Productivity

That evening, as Ah Mah served the family the liang teh she had carefully prepared, the family chatted about the weather.

“Crazy weather, isn’t it? So hot for so long, and then suddenly rain so much on another day. I’m sure quite a number of people will fall sick,” complained Siew Ling.

“Do you think the hot weather makes the air more dusty?” asked Ah Mah.

“I know it’s not like the haze we experienced in 2013 and 2015. I remember people were using more water and air-con then, and falling sick.¹ But with hot weather for weeks or months, with little rain, don’t you think the air pollution has gotten worse?”

“Can you imagine the haze in Sydney from the forest fire last December?” commented Siew Ling.

“I think you’d better drink more water. And better still, don’t stay outside so long. Maybe the outside air is not as good as before. I still remember the haze then. Some people stopped working completely,” coaxed Ah Mah.

“Wow! Ma, you are quite a kiasu,” remarked Teng at the lengths his mother would go to ensure he stayed well.

The reality is that Ah Mah dotes on her son. Teng has been filial to invite her and Ah Kong to live with them. In return, as a parent, she should be looking out for his and his family’s health.

“It is true, Ma. I remember when there was the haze, some of my taxi driver friends stopped driving. Just a slight change in the air quality was enough to influence their decision on whether to drive,” Teng contributed.

“You mean they were so affected by the haze?” enquired Siew Ling with only a remote memory of the haze.

“Yah. My company was concerned because a drop in taxis meant fewer taxis on the road, which therefore meant less income,” added Teng.

“They did a study and found that taxi drivers drove less when the PSI (Pollutant Standards Index) increased. PSI has five categories: Good (0 to 50), moderate (51 to 100), unhealthy (101 to 200), very unhealthy (201 to 300), and hazardous (above 300).

“They found that taxi drivers drove less by 14 minutes each day when the PSI moved from good to moderate. Considering that the average driving time when PSI is good is 522 minutes per day, this is equivalent to a 2.7 percent drop from the average time a taxi driver spends on the road.”

“Wow! I didn’t know taxi drivers are so sensitive to the haze. I can’t recall you stopping to drive so much when there was haze,” said Siew Ling.

[E]very increase in the PSI by 50 led to a reduction of 30 minutes of driving.

Teng carried on. “On top of that, my company found that on average, every increase in the PSI by 50 led to a reduction of 30 minutes of driving. Of course, this gets worse at higher PSI levels. So when the air quality worsens, it is likely that there will be fewer taxis on the road.”

“Then surge prices can become even higher, right? There may be more demand than supply,” exclaimed Ah Mah, who had been caught in a dire situation before – when it was raining heavily, taxis were not easy to get and the prices of Grab cars went extremely high.

“Perhaps you are right, if people still want to go out despite the haze. But I think people would rather stay at home. So both demand and supply drop,” replied Teng.

“Maybe these drivers took a longer break in coffeeshops instead of driving around for passengers?” enquired Siew Ling, trying to understand better how taxi drivers behave.

“I don’t think so,” responded Teng. “My company found that taxi drivers didn’t take a longer break from driving. They stopped driving altogether when the pollution condition worsened. In fact, many took shorter breaks to try to earn as much as possible before calling it a day should the air quality worsen.”

“Hmm . . . That means poor air quality is not only a health threat, but it can also pose as an economic challenge. Productivity is affected,” said Siew Ling who was quite happy that she was drawing such inferences.

“Sadly so. Despite working in the comfort of their cab, taxi drivers are less productive when there is air pollution because inevitably they’ll be exposed to pollutants the moment they step outside of their home,” agreed Teng.

“I remember my company saying something else . . . something like in the United States, there was a study done and they found a 5.5 percent drop in productivity when there is an increase in ozone exposure, or something like that.”

“Wow! If this happens all the time, then we won’t be very productive,” added Ah Kong. Ah Kong has retired but he always has a strong ethic of working hard no matter what.

“I wonder whether other people, not just taxi drivers, will also drive less? Especially since cars in Singapore are so expensive,” wondered Siew Ling.

“Maybe if they drive less, there’ll be less traffic, and that will help reduce air pollution,” Ah Mah joined in.

Sunk Cost Fallacy

Just then, their doorbell rang. Their neighbour, Professor Sing from NUS, dropped by to give them some snacks he had brought from Japan. He had attended a conference there and as usual, brought food souvenirs home for the family and friends.

“Here’s some Kit Kat from Japan. They come in exotic flavours – red bean, crème brulee and even cheesecake. Quite interesting eh?” smiled Professor Sing.

“Thank you. You’re so kind,” said Teng. “Sing, may I ask you this . . . We were just talking about taxi drivers driving less when there is haze or possibly very bad air pollution. Then my wife asked whether other Singaporeans would drive less or not. What do you think?”

“I don’t know about the effects of air pollution. But I know given our high car prices, Singaporeans do not drive less. Do you have time? I can share with you about a study done by two NUS Business School professors and an NTU professor,” replied Professor Sing.

“Oh! You mean NUS and NTU profs do research together?” asked a curious Teng.

“I know, I know. We’re competitors, right? But we’re also collaborative. So these two NUS professors, Ivan Png and Ho Teck Hua, and Sadat Reza from NTU, used data from over 8,000 cars of one particular brand. For the life of me, I can’t remember which one. Anyway, when each car was sent for servicing, they tracked the kilometres driven and analysed the usage against the overall cost of ownership and congestion on Singapore’s roads.

“Interestingly, they found that people drove more when they had bought a car at a higher price. The higher price could be because of higher COE (Certificate of Entitlement) or Additional Registration Fee (ARF).

“And the more driving associated with high car ownership costs was not confined just to young drivers who might be buying the car for the first time. Even experienced and wealthy car owners drove more when the car ownership became more expensive.”

“Huh? How can that be? Ironic, isn’t it? Isn’t COE supposed to curb traffic jam? Now a high COE is encouraging more driving!” quizzed Teng.

“Yup, you’re right. It is indeed ironic. Tackling traffic congestion is a major challenge. The Singapore Government has made car ownership costly and kept public transport alternatives like buses and MRT affordable and efficient to keep cars off the roads.

“My friends from other countries are often shocked at how much we have to pay to own a car. Before buying a car, we have to bid for the right to own a car via COE through a monthly auction where prices fluctuate depending on demand and supply.”

“Eh, Sing. I think these people are so kiasu that they want to maximise every dollar they spent on the car. They want to make every dollar worth the while,” said Teng.

“You are absolutely right. As a taxi driver, you would probably realise this already. Let me explain my colleagues’ research,” as Professor Sing continued.

[I]ncreasing car prices had the unintended consequences of stimulating driving among people who had bought the cars.

“We would have thought that to tackle traffic congestion, we should make car ownership costly. But my colleagues found that increasing car prices had the unintended consequences of stimulating driving among people who had bought the cars. In other words, as Teng said, car buyers reasoned that as they had already paid so much for a car, they should get maximum use out of it!

“So let’s say it’s you, Teng. You bought a car and it costs about $100,000 all in, including COE. You have already invested a lot into the car. And on top of that, the investment cannot be easily reversed. It’s not like stocks where you can sell the investment quite easily. So what would you do?”

“Drive more?” replied Teng with some hesitance.

“Exactly. You’d drive more. You would mentally justify the high cost by using the car more. Instead of easing congestion, a high COE adds to the congestion by having the unintended effect of encouraging people to drive more.”

“I think I understand why people think that way. I’d probably feel the same way too,” agreed Teng. “It’s being kiasu.”

“While that might be the case, my colleagues also found that this kind of thinking is not permanent. It changes over time. What this means is that people do not always think they should use their car so much. For the first 48 months of car ownership, usage is high to compensate for the initial high purchase price. Then as the car ages, usage gradually decreases. But the higher the initial cost, the longer this will take,” Professor Sing elaborated further.

Everyone nodded.

“My colleagues even worked out how many extra kilometres this phenomenon added to Singapore’s roads,” said Professor Sing, while trying to recall the numbers.

“During the time when they studied COEs, the number of COEs had been reduced from something like 10,000 to 6,500. This reduction resulted in more than a doubling of COE prices from $11,000 to over $24,000. So let me ask you. On average, for each month, how many more kilometres do you think people will drive their cars given the increase in COEs?”

Ah Kong who was listening attentively was the first to respond.

“300 kilometres! 10 kilometres more each day.”

“You crazy ah! Singapore is only 50 kilometres wide from East to West, and 27 kilometres from North to South. Do you know how much is 300 kilometres?” Ah Mah scolded her husband. She sometimes thinks that Ah Kong doesn’t think through before he talks.

Only Ah Mah can speak like that to Ah Kong. Everyone else in the family knows too well they should be polite to the patriach.

“How long is our coastline? Teng, quickly Google for the information,” urged Ah Mah.

“193 kilometres” was Teng’s response after a quick search on his smartphone. He was surprised that his mother even knew about Google. He wondered whether she had learnt it from her grandsons.

“Uncle, 300 kilometres is indeed too high,” replied a very amiable Professor Sing, trying to diffuse the momentarily tense moment.

“Eh . . . Maybe 100 kilometres more?” said Siew Ling.

“Almost,” said Professor Sing. “My colleagues found car owners would drive their cars 86 kilometres more per month than they would have otherwise. That’s 5.6 percent more than their average driving distance.”

“Hmm . . . I get it. They want to max out given the high price they have paid for their car since they’ve already paid for it and are stuck with it,” nodded Siew Ling.

“That’s right. It’s a sunk cost,” explained Professor Sing.

[I]n business, sunk costs are not considered in future business decisions because the cost will be the same regardless of the outcome of a decision.

Seeing the confused look on everyone’s face when he mentioned sunk cost, he continued. “A sunk cost is a cost that has already been incurred and cannot be recovered. So in business, sunk costs are not considered in future business decisions because the cost will be the same regardless of the outcome of a decision.”

“I wonder whether the same thing would be true too for the casino levy. You know, the government increased the levy for Singaporeans from $100 to $150. Do you think once someone pays the levy and enters the casino, he will spend as long as he can there?” asked Teng.

“That’s an interesting question,” smiled Professor Sing. “According to the reasoning given by my colleagues, the answer would be a ‘Yes’. If you’ve already paid a levy to play in a casino and you start losing, you are more likely to stick with it as you’ve already invested in the levy and believe it will be a waste to walk away, even though staying may mean spending more.”

“So fascinating. Is there a special name to call this phenomenon?” asked Teng.

“Ah yes. It’s called the ‘Concorde Fallacy’. Do you remember the supersonic aircraft called Concorde that flew between London and New York? It’s named after that plane,” answered Professor Sing.

“Concorde was a very expensive plane. Well, even after it became clear that there was no economic justification to run Concorde, the British and French governments continued to fund the joint development. Maybe it’s the emotional attachment to what they’ve already invested in – time, money and reputation, or whatever.

”Hey sorry. I would like to stay on but I can’t. I’m tired but I need to prepare for tomorrow’s lecture.”

“Thanks so much for the Kit Kat, Sing. Thanks for the explanation too,” said Teng as he closed the door.

“It’s quite interesting isn’t it to know that people’s behaviour changes because of the amount spent on buying a car?” remarked Siew Ling.

As the family sat down together again at the dining table, the conversation on car usage continued.

“I know Singapore wants to avoid massive traffic jams by limiting the number of cars on the road. And to do that, the government has kept car ownership cost prohibitively high. But those who can afford a car will not want to leave their car at home. Otherwise, it will seem to be a waste of the huge money spent on buying the car. Maybe the government should think of other ways to curb congestion,” said Siew Ling.

At this point, Teng paused for a moment. He recalled something that his taxi friends had said.

“I remember my friends saying that the government realised it too – that relying on high car ownership costs to manage congestion may not be effective. So there’s some talk about shifting the tax from car ownership to usage rate instead.”

“When will this start?” Siew Ling asked.

“Some say 2021, but who knows. It seems that a new sophisticated road-pricing system will be implemented. They refer to it as ERP 2.0 or Electronic Road Pricing 2.0. I spoke to this young man the other day. He’s a research assistant at NUS and he gave me some updates. It will use GPS to determine the amount drivers pay based on distance, time, location and vehicle type. Drivers will receive real-time information about the cost and which roads are experiencing higher congestion.”

“Will this affect your taxi? You drive a lot and throughout the day,” added Siew Ling, the wife who is concerned with expenses.

Before Teng could reply, Ah Mah said, “I think more people will take public transportation that is not only cheap but also convenient. Your father and I were at the community centre this morning and they encouraged working people to take the MRT early to reduce crowding.”

Incentives to Ease Congestion

Earlier that day, Ah Kong and Ah Mah were at the community centre attending a talk organised to encourage people to take public transportation during off-peak periods for their morning commute.

“But if everyone were to take the MRT, then each train carriage will be super crowded. I’ll be squeezed like sardines in a tin can. Why would I want to do that?” quizzed Ah Mah.

“And if you were working, you’d have no choice but to do this twice every day during peak periods – when going to work and when coming home. Urgh . . . Having to stand so close to each other and bear with the armpit smell. How horrible,” Ah Mah shuddered.

“Let’s just go and listen. We are not affected since we don’t need to travel during peak periods. Let’s hear what the LTA (Land Transport Authority) has to say. Maybe they have brilliant ideas,” said Ah Kong, somewhat sarcastically as he was still sore with the numerous MRT breakdowns he had experienced.

“Thank you everyone for coming to this talk. Please grab a seat quickly as we will begin soon,” announced an administrator from the community centre. As usual, she tapped on the microphone to make sure that was working.

“I’m sure all of you have encountered instances when the MRT is so crowded that you either have to stand very closely to one another or worse, miss the train and be late for work or an appointment. Today, we have Mr Yang from the LTA to share with us steps that the LTA is doing to alleviate overcrowding in trains. Mr Yang, please.”

It turned out that Mr Yang was in charge of special projects at the LTA which included studies on incentivising Singaporeans to take the MRT during off-peak hours.

“I wonder whether our neighbour, Josie, knows Mr Yang,” whispered Ah Mah to Ah Kong. Josie used to work at the LTA, although now she has moved on to the NEA (National Environment Agency).

“Shh . . . He’s going to speak,” whispered Ah Kong to remain polite and attentive.

Here’s what Mr Yang had to say:

“Overcrowding is a serious issue. In New York, 40 percent of its subway train delay incidences are caused by overcrowding. We want to avoid such a situation.

“We recognise that riding in a crammed MRT can be a miserable commute for people especially if this occurs twice a day, five days a week, when going to work and back home.

“Whilst spending on more personnel, trains and infrastructure may help to alleviate overcrowding, the reality is that there are diminishing returns on such investments when the demand for these extra resources is concentrated only at certain times. First, there are physical limits to adding more trains. Worse, these expensive additional trains would be left idle during off-peak hours.

“So we started thinking of other strategies that we can do to alleviate overcrowding. One solution is to persuade commuters to stagger or spread out their journeys. Why should everyone travel at the same time? Instead, we want to encourage people who can shift their travel time, to take the MRT at less busy times.

“The question then is how to make this shift not only successful but also lasting.”

Mr Yang waited for a while to let the information sink in, and then continued.

“In some countries, the authorities impose surcharges during peak hours to discourage such travel. But studies have shown that such surcharges have little impact on travel patterns. I’m sure you don’t like to see fare hikes, right? Well, studies also show that surcharges only add to commuter resentment to having pay more. Moreover, imposing surcharges is politically unpopular.

“So what can the LTA do to encourage Singaporeans to stagger their commute time so that people can have a more comfortable MRT journey especially during peak hours?

“We partnered with NUS Business School to examine which type of incentive scheme would be effective. Today, I’ll be sharing with you one of several studies that we’ve conducted.”

Mr Yang looked around the audience, made up of mainly retirees, to see that they registered what he had said so far.

He thought to himself. “Sigh . . . It’s unfortunate that the audience doesn’t have many working adults. This is not exactly the target audience we want. Hopefully they’ll convey today’s message to their children. Perhaps we’ll have to conduct more of such talks at workplace areas during lunch time.”

Aloud, Mr Yang addressed the crowd. “In this study, we recruited 350 regular morning commuters as participants. We monitored their MRT commute for 20 weeks first to see the average time they exit the station.

“Then we asked ourselves, ‘If we were to give them some incentives, would they use the MRT earlier and hence, exit the station earlier?’ In other words, we want to encourage them to use the MRT before their usual time so that ridership can be spread out across times to minimise overcrowding during peak periods.

“So we divided these 350 commuters into three groups. One group did not receive any reward. They are what we call the Control group. They travelled as usual and paid the normal fare. The other two groups received an incentive. One group was rewarded a full rebate of their fare if they exited the station before 7:45 AM. In other words, they travel for free. We call this group ‘Early Treatment’. The other group received a full rebate if they exited by 8:00 AM, and we call this group ‘Late Treatment’.

“Now, you can well imagine that if you were one of the participants and you just missed the free travel cut-off time, you might be upset that you had just missed getting free travel, right? So to avoid such disappointment, those who narrowly missed the cut-off time were given a 50-cent discount during a 15-minute grace period from 7:45 to 8:00 AM (for the ‘Early Treatment’) and 8:00 to 8:15 AM (for the ‘Late Treatment’).

“Let me show you the various groups and incentives:

Group	Behaviour	Reward
Control	Travel as normal	No incentives given
Early Treatment	Exit MRT station before 7:45 AM	Full rebate of fare
Late Treatment	Exit MRT station before 8:00 AM	Full rebate of fare

“We then monitored their travel patterns during the 10 weeks when the incentives were given. After the incentive programmes were over, we continued to monitor their commute for another 30 weeks to see whether the incentive programmes were persistent in changing commute behaviour. So altogether, we monitored their travel patterns for 60 weeks – 20 weeks before the rewards were given, and 40 weeks after they were given, of which 10 weeks were the reward period.”

“Is this all good? You follow me?” asked Mr Yang.

The audience nodded. Satisfied, Mr Yang carried on, speaking slowly and clearly.

“Here are the findings:

“On the left margin is the exit times in the morning when commuters go to work. Remember that we want to encourage them to exit earlier than usual to relieve congestion during the peak period.

“The solid line is the Control group that did not receive any reward. They travel on full fare. The short dashed line is the Early Treatment group where commuters receive a full fare rebate if they exited the station before 7:45 AM. The long dashed line is the Late Treatment group where commuters receive the same rebate if they exited before 8:00 AM.

“There are three time periods that we want to study. The two vertical lines demarcate the 10-week reward period, separating it from before the programme started and after the programme ended.

“If you look at the graph, not everyone succeeded in exiting before the cut-off exit time, but you can see that they tried. Looking at the 10-week reward period, you can see the exit times for the Early and Late Treatment groups went down immediately in response to the reward. When the 10-week reward programme was over, we see the exit time went up for both groups. That’s to be expected because there was no more reward.

“But what is interesting is that the difference in exit times between those who received the rewards and the Control group that didn’t receive any rebate persists. Look at the lines to the right of the graph during the Post-reward period. The short and long dashed lines continued to be way below that of the solid line. Remember that the solid line denotes commuters who didn’t receive any reward, and the short dashed and long dashed lines are those who received rewards for being early.

“What this means is that having received the reward in the weeks prior, these commuters continued to exit the station earlier than those who did not receive any rewards, although not as early as they did when they were incentivised. So, incentivising them did work.”

Mr Yang looked around the audience to make sure they understood.

“Here’s another finding that shows the percentage of commuters who exited by 8:00 AM.

“After receiving the reward, the percentage of passengers who completed their trip by 8:00 AM went up compared to those who didn’t receive any reward. And this behaviour continued even after the reward was discontinued.

“All in, during the 10-week reward period, we were able to shift 271 trips out of the peak period of 8:15 to 9:00 AM. After the reward period, we continued to shift 553 trips out of peak period. So congestion was largely alleviated.

“So, you might ask – Why did commuters in the reward groups persist in using the MRT earlier? After all, there were no more financial rewards to be gained.

“Now, we must bear in mind that the reward, a full rebate of fare, is really not a huge reward. On average, the fare is $1.30 and that is miniscule considering our average income. Public transportation in Singapore is relatively cheap compared to other developed countries.

“So, here’s what we think. We think it’s because of this phenomenon called habit formation. During the reward period, not only did commuters receive financial rewards, as small as that might be for being an early bird, but they also learned through the experience the non-monetary benefits associated with early travel such as less crowded trains and less stress from being late for work. They began to enjoy these non-monetary perks and stayed on with this travel pattern even when there were no more financial rewards. A habit has been formed. And a good one at that!

[O]ffering a temporary incentive or ‘nudge’ could induce lasting change in behaviour even well after the financial rewards are withdrawn.

“In summary, our findings showed that offering a temporary incentive or ‘nudge’ could induce lasting change in behaviour even well after the financial rewards are withdrawn.

“I see that many of you here are retirees. But still young at heart! Please encourage the working adults in your family to go to work earlier to beat the crowd so that more people, including themselves, can enjoy a more hassle-free journey. Thank you.”

The discussion was then open to the floor.

Someone behind Ah Kong and Ah Mah asked, “You carried your study only among 350 people and gave incentives for only 10 weeks. If the LTA were to give these rewards nation-wide to encourage non-peak period travel, it can be very expensive. You also mentioned that infrastructural improvements would require higher capital and the returns were not sustainable. How does giving rewards compare to the cost of adding a new train?”

It seemed Mr Yang was well prepared for this question as he replied without hesitation.

“Thank you for the question. We’ve asked this too among ourselves. Allow me to give you an example. A train, and let me be as specific as possible – the Kawasaki Heavy Industries C151 – with a capacity to hold 2,000 passengers costs about $13 million. The parallel scenario would be how much would it cost to shift 2,000 passengers to travel and exit earlier using such a reward programme? Does that seem to be a fair comparison?”

Some in the audience nodded in agreement.

“I had said earlier that the average train ride is about $1.30. Over the 10-week period, we paid $1,346 in rebates – $417 to Early Treatment commuters and $929 to Late Treatment commuters – to effectively shift them to use the train earlier and exit before the peak period to relieve congestion.

“If we were to extend this to shifting 2,000 passengers daily, which is what adding a train would do, we would hit the $13 million cost of adding that train in slightly less than 3.5 years. Now, that’s not very cost effective, is it?”

Mr Yang raised his eyebrow as he asked the last question. The audience, though mainly retirees, was fairly sharp when it comes to money matters and nodded.

“But, think about it,” Mr Yang nudged. “We really do not need to reward people every time they travel earlier. We just need to reward them for only a limited period of time; in our study, it was 10 weeks. People’s commuting behaviour can change and we’ve shown that to be the case. They travel earlier. And importantly, the change persists for a while. Then when the early-travel behaviour dissipates, we can re-introduce the reward programme.

“So, let’s say we conduct the reward programme for 10 weeks and discontinue it and re-introduce it some four to five months later. Then we can have a seven-month cycle including the 10 weeks of reward, right?

“If that is the case, we find that under this scenario, we can enjoy similar benefits of adding a train for some 20 years before the cumulative costs of the reward is as much as the cost of buying a new train.

“And mind you, this does not even take into account the operational costs of maintaining the train. Moreover, the reward programme is flexible and can be tweaked should travel behaviour change, while investing in a train is a sunk cost.”

Another question was raised.

“What plans does the LTA have then to encourage commuters to change their travel pattern?”

Mr Yang paused for a while, debating in his mind how much he should reveal.

“The LTA will certainly be collecting more data to ensure that whatever schemes we introduce will work and are cost effective. One possibility is the use of travel smartcards that have data on how a commuter travels. This will allow us to tailor individualised incentive schemes based on each commuter’s travel patterns instead of a generic reward system.”

When the talk was over, Ah Mah told Ah Kong, “I think we should tell Siew Ling this just in case she has to take the MRT to work in the future.”

Ah Kong turned to her, knowing how much she spoils the grandsons. “It seems that while being rewarded financially changes behaviour, people can learn and appreciate the non-monetary rewards also. And will continue their changed behaviour when there are no more financial rewards given. I think we can learn from this with regards to rewarding our grandsons. We cannot always reward them for good behaviour. They have to learn that there are other benefits to good behaviour.”

Ah Mah nodded in agreement.

WANT TO KNOW MORE?

This chapter is based on the following research: Sumit Agarwal, Cheng Shih-Fen, Jussi Keppo and Yang Yang (2017), “The Impact of Air Pollution on Labour Productivity,” Working Paper, National University of Singapore; Sumit Agarwal, Koo Kang Mo and Sing Tien Foo (2017), “Haze and Productivity,” Working Paper, National University of Singapore; Sumit Agarwal, Koo Kang Mo and Sing Tien Foo, “Air quality affects productivity: Study,” The New Paper, (14 May 2019), https://www.tnp.sg/news/views/air-quality-affects-productivity-study; Ho Teck Hua, Ivan P.L. Png and Sadat Reza (2018), “Sunk Cost Fallacy in Driving the World’s Costliest Cars,” Management Science, Vol. 64 (4), pp. 1761-1778, https://mpra.ub.uni-muenchen.de/82139/1/MPRA_paper_82139.pdf; Yang Nan and Lim Yong Long (2018), “Temporary Incentives Change Daily Routines: Evidence from a Field Experiment on Singapore’s Subways,” Management Science, Vol. 64 (7), pp. 3365-3379, https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2017.2731

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¹ For more on this research on the effects of haze on Singaporeans’ utilities consumption, see Sumit Agarwal, Ang Swee Hoon and Sing Tien Foo (2018), Kiasunomics: Stories of Singaporean Economic Behaviours, Chapter 16 “Smoke Gets in Your Eyes,” (Singapore: World Scientific Publishers). To read the academic article, see Sumit Agarwal, Sing Tien Foo and Yang Yang (2017), “Risk Avoidance and Environmental Hazard: Effects of the Transboundary Haze Pollution in Singapore,” https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2942096