Towards a choice-based citizenship

A number of prominent commentators have seen a move to approaches that place greater weight on individualised rational action as the basis of a ‘revolution in social policy’ (Bartlett et al., Reference Bartlett, Roberts and Grand1998). This article discusses relevant literatures that often attract limited attention among social policy academics. These provide evidence indicating that the way in which people make rational choices is heavily influenced by social context and by the institutional setting in which choice is framed. Attempts to change behaviour by shifting incentives may also affect social values and erode the values that underlie citizen willingness to support humane and redistributive welfare states.

One way of analysing the recent development of welfare states suggests that a transition is underway from what might be termed a ‘traditional industrial’ to a ‘post-industrial’ settlement. The traditional settlement characterised welfare policies in western European countries and much of the English-speaking world from the 1950s to the 1970s. An industrial economy provided breadwinner wages to a predominantly male labour force, managed through broadly neo-Keynesian policies by a government that was able to establish national interest and exchange rates and exert a strong influence on levels of economic activity and employment (Jessop, Reference Jessop2002). Social care and reproductive work was typically carried out informally in a gendered division of labour (Williams, Reference Williams1988: chs 6, 7). The welfare state was primarily concerned to redistribute incomes horizontally to meet the needs of the population when access to wages was interrupted by illness, temporary unemployment or retirement; to provide social services in an agreed range of areas (most notably, health care, education and training, some social care); and to redistribute vertically to low-income minorities through benefits, typically means-tested, and often social housing (Bonoli, Reference Bonoli2005). The main political forces structuring the traditional welfare state were based on class, originating in the struggles of the (male) industrial working class and over time accreting the support of some middle-class groups and of those employed in an expanding welfare state (Baldwin, Reference Baldwin1990; Goodin and Le Grand, Reference Goodin and Le Grand1987: ch. 1).

The industrial welfare state has been challenged in a number of areas: by shifts in labour markets, as the transition from manufacturing to service sector as the major provider of employment undermines the principle of breadwinner wages, threatens the male union solidarity that supported it and generates greater inequality in market incomes (Huber and Stephens, Reference Huber and Stephens2001); at an economic level, as globalisation threatens the capacity of national governments to control interest and exchange rates against those determined in international financial markets (Scharpf and Schmidt, Reference Scharpf and Schmidt2000); in politics as social class is supplanted by more diverse cleavages in relation to gender, age, consumption and ethnic identity; and in social life as population ageing and other changes increase demands on the traditional social services, while better-educated and more self-confident citizens demand more responsive provision and more say in service planning (Giddens, Reference Giddens1994). The upshot is that governments find it increasingly difficult to sustain the traditional welfare settlement. They seek to develop more cost-effective provision that will meet the demands of politically articulate groups, while also enhancing national economic competitiveness.

Reform controversies

The reforms are recent and continuing. Their longer-term impact is hard to assess. They are controversial for a number of reasons. First, several writers point out inconsistencies between the objectives and mechanisms of reform. For example, in education the promotion of elite schools with privileged access to resources arguably conflicts with assumptions about open market competition and ‘continues to perpetuate a divided and divisive system’ (Tomlinson, Reference Tomlinson2001: 169). The terms on which private finance is contracted for capital projects appear cost-inefficient in the longer term (Pollock et al., Reference Pollock, Shaoul and Vickers2002).

A second area of controversy is the extent to which outputs have improved as a result of the new policies. In many areas, output measures have advanced. For example, in the NHS performance against targets for cardiac and cancer mortality and for waiting lists and waiting times has improved markedly (King's Fund, 2005). However, critics have pointed out that incentive systems of this kind encourage game playing, so that headline achievements against targets may be misleading (Bevan and Hood, Reference Bevan and Hood2006). In general, there is a risk that, unless carefully designed, markets may encourage cream-skimming and other unwanted developments (Propper et al., Reference Propper, Wilson and Burgess2006; see the extensive review by Reference 66, 2003: 250–1).

A third issue concerns the empirical question of how greatly citizens value consumer choice in welfare matters. Proponents of market systems often reinforce the claim that opportunities for choice are effective means of promoting efficiency through competition (Barr, Reference Barr1998: 78) with the argument that most people want more choice as service users. If correct, this argument carries considerable weight as part of democratic citizenship. The survey evidence reported in Table 1, which gives responses to questions about choice of hospital, appointment time and treatment in the NHS, is often cited in this context. Comparison of columns one and four shows strong agreement with the view that patients should have more say, contrasted with a much lower level of belief that patients actually do have much say. The other columns show the relevant statistics for professional and managerial and routine working-class subgroups in the sample. These indicate that enthusiasm for a greater say is not primarily a middle-class luxury but is felt more strongly by working-class respondents. This and similar material is often used to indicate a suppressed desire for choice in the NHS (for example, Le Grand, Reference Le Grand2006a, Reference Le Grand2006b).

TABLE 1.

Voice and consultation: BSA 2004/5 (%)

Note: Statistics are those responding ‘a great deal’ plus those responding ‘quite a lot’.

Two points arise: further analysis shows that choice is less important in determining satisfaction than measures of perceived quality of service, indicating that popular desire for greater choice may be real but weak. Appleby and Alvarez-Rossette conclude from a detailed multivariate analysis:

satisfaction with the NHS overall suggests that improving patient choice may have little impact . . . improving GP appointment systems, the time GPs give patients in their consultations and the waiting times in accident and emergency, as well as reducing waiting times for an outpatient appointment may well have a significant impact (2005: 129).

Similarly, analysis of the Healthcare Commission's annual patient survey for 2006 shows that ‘patients are not interested in choosing the hospital where they will be treated’ (The Guardian, 2007).

Secondly, examination of wording reveals that the question does not directly address consumer choice as operationalised via a market. The statement with which people are invited to agree or disagree refers to ‘how much say’ people should have in the various areas of health provision. Greater ‘say’ can be achieved by a number of methods, including consultation and participation exercises, engagement through citizens’ juries, opinion survey and user panels, all methods which stress ‘voice’ rather than ‘choice’ (Hirschman, Reference Hirschman1970). All of these methods have gained in importance in recent years and all are compatible with both non-market and market systems (IPPR, 2005; Smith and Wales, Reference Smith and Wales2000). The claim that the shift to greater consumer choice through quasi-market systems is strongly endorsed by the public opinion evidence quoted may be misleading. It is uncertain whether the attitude research shows that substantial majorities believe that people ‘should have a great deal or quite a lot of choice of hospital’ (Le Grand, Reference Le Grand2006b).

Context and individualised rational behaviour

In this section, we discuss recent work on motivation and rational actor models derived mainly from research in economics and psychology using games, experiments and social surveys. The argument here draws particularly on the work of Gintis et al. (Reference Gintis, Bowles, Boyd and Fehr2005) and of Rothstein (Reference Rothstein2005).

Self-regarding individualism has been important in economics and has influenced important streams of work in evolutionary biology (developed through the notion of the selfish gene, Dawkins, Reference Dawkins1976; socio-biology, Wilson, Reference Wilson1975; and moral biology, Alexander, Reference Alexander1987). Gintis and his colleagues offer the alternative view that people ‘are often neither self-regarding nor altruistic’. They are what is termed ‘strong reciprocators: conditional co-operators (who behave altruistically as long as others are doing so as well) and altruistic punishers (who apply sanctions to those who behave unfairly according to the prevalent norms of co-operation)’ (Gintis et al., Reference Gintis, Bowles, Boyd and Fehr2005: 8). Punishment is understood as altruistic because (it is claimed) people will make sacrifices to punish someone who transgresses group norms. The implication is that it is social context and thus, in relation to modern welfare state societies, the way in which the design of social institutions frames choices, that is influential in promoting a particular pattern of motivation.

It is easy to imagine circumstances in which other-regarding behaviour will fail to advance social ends (for example, if an individual chooses to work hard within a generous welfare state while others batten on hand-outs, the outcome will not be a mutually beneficial highly productive society; if one official is honest and others accept bribes, they grow richer and the upright bureaucrat achieves little; Rothstein, Reference Rothstein2005: 133). The risk for an altruist is that others will defect from virtuous behaviour for self-regarding reasons. Evolutionary biologists typically argue that such processes will ‘breed out’ altruism. An organism that seeks to advance the interests of others who do not carry the same genetic material will simply be exploited and its genetic heritage expire. However, multi-level models that take into account the possibility that strong reciprocity, which includes the use of within-group sanctions against defectors, may increase the survival capacity of the group suggest that strong reciprocity as defined above is viable in the long term (Boyd, Reference Boyd2002). Observation ranging from colonies of vampire bats to primates provides empirical support (Trivers, Reference Trivers1971; Sober and Wilson, Reference Sober and Wilson1998).

To take the argument beyond the possible evolution of the range of motivational patterns to which humans as animals have access, one technique for investigating how people interact is through the study of games. The tradition of work in this field calls into question the importance of immediate self-regarding motivation. Axelrod's influential work (Reference Axelrod1981) demonstrated that play in repeated prisoners’ dilemma games, after an initial period in which players defected from co-operation, tended to converge on a simple and reciprocal tit-for-tat strategy (see Poundstone, Reference Poundstone1992). Meta-studies of a large number of experiments shows that, even in one-shot games with strangers, a substantial minority (about a third) do not interact in an immediately self-interested way; that cooperation to reciprocal advantage is sharply increased by opportunities for communication; that it is easy to engender ‘tribalism’ (conflicts between groups of subjects in games), by permitting in-group and preventing out-group communication; and that co-operative play declines as a series of games approaches the end (Sally, Reference Sally1995; Camerer and Thaler, Reference Camerer and Thaler1995; Camerer, Reference Camerer2003; see Rothstein, Reference Rothstein2005: 96). Ostrom's work also demonstrates that those who are more experienced at the games tend to co-operate more, while face-to-face communication strongly supports co-operative behaviour (Ostrom, Reference Ostrom2000; Ostrom and Walker, Reference Ostrom, Walker and Mueller1997). These findings imply that short-term self-regarding rationality is not the automatic and basic driver in people's interactions. People can take a longer view of what best serves the advantages of self and others, but the extent to which this happens is influenced by context.

One of the simplest and most widely studied games is the ‘Ultimatum Game’. A proposes an allocation of resources held by the umpire to B; if B accepts, the allocation takes place; if not, no-one gets anything. Given pure self-regarding motivation, A should offer the lowest possible amount and B accept, since the alternative for B is nothing. In practice, only a minority of players seem to behave in this manner. 50:50 is the modal offer by A, and B typically rejects offers below 30 per cent (see the review by Camerer and Thaler, Reference Camerer and Thaler1995). Proposers typically say that they offer more than the minimum because they are concerned about rejection, indicating that assumptions about social norms from the world outside the game influence the rationalities dictating play within it (Gintis et al., Reference Gintis, Bowles, Boyd and Fehr2005: 13). Repeated play, alternation of roles and, most notably, opportunities for communication, reinforce reciprocity, as in Sally's study (1995).

Perhaps the most celebrated study of the ultimatum game is that by Henrich and colleagues, which researched 15 small-scale societies in 12 countries on four continents, covering a wide range of economic and cultural conditions (nomads, slash-and-burn agriculturalists, settled agriculturalists, foragers). The key findings are:

Other findings concern behavioural variability between groups, which is not explained by economic and demographic variables. This work supports the ideas that behaviour is not dominated by immediately self-regarding motives, that reciprocity is entirely possible (interestingly, in contexts of greater market integration and when more is at stake) and that context shapes behaviour. The finding about the role of market integration suggests that the predominance of a market framework does not drive out possible use of policy interventions based on collective social benefit. Indeed societies that rely more on the market may be more likely to evolve norms of mutual fairness in interactions than those at a stage of development where markets are less common.

Further support for the possibility of strong reciprocity is found in work by Fehr and colleagues (2002) on repeated public goods games. These games endow players with a set quantity of resources and allow them to contribute to a common account. All players gain rewards proportional to the size of the common account, whether they have contributed or not, permitting substantial ‘free-rider’ effects. A reciprocal investment solution will yield the highest return to everyone, provided all contribute. However, self-regarding rationality suggests a zero or low contribution so that the individual reaps the benefits from others’ investments while retaining all her own endowment. In fact, players typically contribute about half their endowments according to Gintis et al. (Reference Gintis, Bowles, Boyd and Fehr2005: 16) or between 40 and 60 per cent (Ostrom, Reference Ostrom2000). This may fall in subsequent rounds (possibly as players realise the potential short-term reward for non-participation), but the introduction of opportunities to punish non-reciprocators sharply reduces the incidence of such behaviour (Fehr and Gächter, Reference Fehr and Gächter2000; Gintis et al., Reference Gintis, Bowles, Boyd and Fehr2005). Even when fining others implies real costs for the individual who punishes, the use of fines achieves high levels of co-operation, especially in repeated play within partner groups (Fehr et al., Reference Fehr, Fischbacher and Gächter2002; Ostrom, Reference Ostrom2000; Gintis et al., Reference Gintis, Bowles, Boyd and Fehr2005). People act altruistically (in the sense that it costs them, for no immediate personal benefit) to reinforce the norms that lead to long-term group advantage. This suggests that it is possible to sustain a system of values beyond either short-term or long-term enlightened self-interest.

A practical example concerns the management of public goods. Hardin's analysis (Reference Hardin1968) of the ‘tragedy of the commons’ points out that resources such as common land or fish stocks risk depletion through over-use, because self-regarding individuals will pursue their own advantage in the expectation that others will do so. Ostrom (Reference Ostrom1990) investigates the role of community-regulated systems of restraints in relation to water usage in California, and shows that participation in decisions about the rules of usage together with the monitoring of users by other users leads to a mutually sustainable solution:

Institutional context again influences behaviour, and communication plays an important role.

This brief review draws together some of the evidence indicating that the context in which people make choices influences their behaviour and the values that underlie it. It affects the extent to which they pursue an immediately self-regarding approach, simply maximising their own short-term interest regardless of that of others or of the community, or conversely adopt a more pro-social approach. Of course, the latter may include the enlightened longer-term self-interest of those who invest in the group to achieve greater eventual rewards, just as it may be interpreted in terms of respect for the needs of those who are more vulnerable. From the viewpoint of the proponent of the reforms, it seems that individualised choice does not inevitably drive people towards the kind of immediately self-interested action that damages welfare states, providing that the institutions are appropriately designed. From the viewpoint of a critic, individuals appear to have access to a range of values and the context in which they find themselves does appear to influence which predominates.

Opportunities for communication across the group and repeated interactions are important in this. One implication is that individualised choice in response to personal judgements about alternatives and the social and communicative development of ideas are not necessarily alternatives in producing the best outcomes from a welfare perspective. Simple market systems, where it is assumed that individuals communicate their preferences just through market choices, and where consultation, participation and engagement play a minor role, are not likely to achieve these outcomes. Such institutions seem likely to channel behaviour towards the pursuit of immediate short-term self-interest, making longer-term commitments and support for horizontal redistribution or collective provision more difficult. These points have implications for reform.

Social values and institutional frameworks

The above discussion raises the question of how values relate to institutional framework and this is the theme of the second literature to be considered, which shifts the emphasis to the norms implicit in the institutions of developed societies. The social psychologist, Bruno Frey, adopts an individualist rational actor approach to agency, but distinguishes different kinds of rationality guiding behaviour. He investigates the relationship between what he terms ‘intrinsic’ and ‘extrinsic’ rational motivations, relevant, for example, to voluntary and paid effort. The former derive from the value of the activity in itself; the latter through its value as a means to some good such as an income. He hypothesises that the substitution of payment for voluntary commitment (as may take place when cash payments are introduced in community care) will involve an inefficient use of resources, even if more output is achieved. The reason is that a particular level of effort was previously available free, and that the translation of the activity into the cash nexus requires that this proportion of output now has to be paid for (Frey, Reference Frey and Taylor-Gooby2000). People appear to be able to operate in terms of both altruistic voluntary and self-interested financial motives. Appeal to the latter ‘crowds out’ the former.

A much-quoted example concerns a survey about the acceptability of a nuclear waste dump to citizens of different Swiss cantons. This showed that individuals in fact were less likely to accept waste when offered a relatively low payment than when doing so voluntarily. A substantially higher payment was required to achieve the same strength of acceptance as no payment. This is explained in terms of an intrinsic motivation (service to the energy needs of the community) that is undermined by a low payment, which is itself insufficient to generate the same level of willingness to store potentially polluting material (Frey, Reference Frey1997).

Contrary evidence shows that voluntary workers who provide social care (typically women acting informally to meet the needs of frail family members: Ungerson, Reference Ungerson2000: 630) often welcome payments. These do not erode effort since they are seen as recognition for useful work previously unacknowledged by the community, and are valuable to those on relatively low incomes (Le Grand, Reference Le Grand2003: 43–4). Interestingly, it is not so much the market value of the cash payment to the individual but the symbolic value – the fact that it represents acknowledgement of a social contribution – that is important. In this case, the intrinsic motivation is reinforced, not crowded out.

Other examples are often taken to indicate that motives are influenced by the framing of an action as voluntary as opposed to self-interested: blood donorship (Titmuss, Reference Titmuss1971), or the fact that tax compliance is much higher than is justified by rational fear of typical penalties for evasion (Frey and Torgler, Reference Frey and Torgler2006). Conversely, small rewards appear to have a considerable impact on mutually beneficial good tenanting behaviour (Le Grand, Reference Le Grand2003: 118–19). Paid community care experiments have been highly successful (Davies and Challis, Reference Davies and Challis1986). These examples all raise the question of whether a transition from state or voluntary provision to the market nexus introduces a different frame of reference for making choices. The values associated with the market are concerned with individualised reward. This is the basis of a logic of incentives. Outside the market, values may derive from a range of sources. Such values are experienced by individuals and contribute to individual reflection and choice, but do not originate with the individual. They are part of the broader social structure in which the individual participates, which informs many aspects of social life and in which values are sanctioned as social norms.

Economic sociology takes the argument further in more wide-ranging examinations of the role of social values in economic life. Smelser and Swedberg's useful review (1994: 3–26) distinguishes between mainstream economics and economic sociology on a number of grounds. These include the idea that economics tends towards a methodological individualism, whereas economic sociology is interested in actions as social actions, in so far as ‘they take account of the behaviour of other institutions and thereby are oriented in their course’ (Weber, Reference Weber1978: 4). In addition, economics tends to rely on a formal rationality, concerned with the maximisation of individual utility. Economic sociologists also refer to substantive rationality, ‘referring to allocation within the guidelines of other principles, such as communal loyalties or sacred values’ (Smelser and Swedberg, Reference Smelser and Swedberg1994: 5). A third point refers to the concept of ‘embeddedness’, widely used in economic sociology and developed by Polanyi: ‘the human economy is embedded and enmeshed in institutions, economic and non-economic. The inclusion of the non-economic is vital’ (Polanyi et al., Reference Polanyi, Ahrensberg and Pearson1971: 250).

Much recent work in economic sociology is programmatic and only weakly developed in empirical testing. However, Granovetter (Reference Granovetter1985) has developed an account that treads a middle path between simply seeing people as purely individualised or as entirely subordinate to social norms in their behaviour. This is applied to a wide-ranging set of issues, including work effort, the behaviour of unemployed people and also inter-firm communication and market trust (Granovetter and Swedberg, Reference Granovetter and Swedberg1992). The relevance of this work is that it emphasises the role played by social norms in setting limits to the scope of rational action and in directing behaviour that bears on the kind of choices that face people in the context of social policy.

Social policy researchers have discussed how service users interpret and respond to the new opportunities for choice as policies are developed on the assumption of individualised rational action. Many of these studies use qualitative methods to explore the role of social values in influencing the choices people make. They cover health care (Taylor-Gooby, Reference Taylor-Gooby2008; Baldock and Ungerson, Reference Baldock and Ungerson1994), social care (Hoggett et al., Reference Hoggett, Mayo and Miller2006; Smith, Reference Smith2001), cash benefits (Morris, Reference Morris1994; Dean, Reference Dean and Taylor-Gooby2000) and welfare-to-work programmes for mothers (Duncan and Irwin, Reference Duncan and Irwin2004). They produce evidence of problems and unexpected outcomes resulting from inconsistencies between the assumptions of policy-makers about the individualised values that will guide choice and the social values held by different groups of service users.

A much-quoted study of the impact of mixed economy community care services, in which users make choices between different providers within a cash nexus, concludes:

Research on the motives and values of care workers by Hoggett and colleagues stresses that ‘we need a more complex conceptual framework than that provided either by simple public sector ethos/private sector ethos distinctions or by . . . economic individualism’ (2006: 770). They argue that workers’ discursive practices include concerns for both their own interests and those of the public and service users, so that a stress on individualised interest disrupts the moral framework in which they understand their role.

In a different context, Duncan and Irwin's discussion of a series of studies of how mothers make choices between providing care for young children themselves and pursuing paid work and relying on child care provided by someone else, in the context of ‘welfare-to-work’ programmes, shows the influence of normative assumptions about the acceptable way to behave:

One outcome of the collision between the value assumptions that guide expectations about social provision and those implicit in the new welfare settlement may be a diminution in trust in the services (Taylor-Gooby, Reference Taylor-Gooby2006, Reference Taylor-Gooby2007). Schee and colleagues, analysing attitude survey data on responses to NPM in public services in the Netherlands, identify ‘a decline in confidence by service users in the relevant institutions’ (Schee et al., Reference Schee, Groenewegen and Friele2006: 468). As provision is reframed in the context of a competitive quasi-market, a more critical caveat emptor consumerism emerges among users.

A further illustration of social embedding is provided by cross-national differences in perceptions and values about welfare issues. There is substantial agreement among attitude survey analysts that popular understanding of why some people are poor varies between societies. These differences appear to correspond to the predominance of market institutions. The most widely used question asks why people experience poverty and allows respondents to distinguish between luck, effort or laziness and circumstances beyond individual control. It is included in the repeated surveys of the International Social Survey Project (see www.isp.org), the British Social Attitudes survey (see Park et al., Reference Park, Curtice, Thomson, Bromley, Phillips and Johnson2005) and in a number of US and EU surveys such as Gallup (1998) and Eurobarometer (for example, no. 5, 1976; no. 40, 1993). Poverty is more frequently understood in terms of effort and laziness in more market-oriented societies such as the US or the UK, and in terms of luck or matters beyond individual control in social democratic countries such as Sweden (Hills, Reference Hills, Park, Curtice, Thomson, Jarvis and Bromley2001, Table 1.6; Taylor-Gooby, Reference Taylor-Gooby2004; Svallfors, Reference Svallfors1993; van Oorschott and Halman, Reference Van Oorschott and Halman2000).

These perceptions relate to expectations about the proper role of government in redistribution. Linos and West demonstrate ‘clear cross-national variation in the determinants of support for government redistribution . . . consistent with the predictions of the comparative literature on the welfare state’ (2003: 404). There is thus prima facie evidence that social institutional context has an influence on the extent to which people's views on concrete issues such as poverty are consistent with the experience of a welfare framework, which attributes responsibility for problems primarily to the individuals who experience them.

This work illustrates the way in which the values that guide the choices people make are not simply individual characteristics, but are embedded in the contexts that people inhabit in society. Standing behind the rules of the institutional framework, which can be altered by government policy, lie the social structures, which are not so readily amenable to change. These structures provide different ways of understanding behaviour within a market nexus from that in other social interactions, and endorse different normative frameworks as appropriate to them. Shifting an activity from one to the other runs the risk of provoking discordance in values. This leads either to the kind of displacement and substitution pointed to by Frey or to the confusion, frustration and unintended outcomes that emerge in many of the welfare studies.

Emerging issues

The literatures reviewed above point to two main issues: the more rigidly structured and individualised work in evolutionary psychology and in the study of games indicating that people have a range of ways of responding to the incentives available to them and that the behaviour that results is strongly influenced by context. Social actors are able to recognise and pursue immediate self-interest, but can also identify and learn to promote a longer-term and more social interest. The capacity to do this is much advanced by opportunities for communication and interaction. This suggests that, as rational actors, people are not simply prisoners of immediate interest (‘rational fools’ as Sen puts it, Reference Sen1977). They can behave in ways that take account of both short-term and longer-term interest and of individualised incentives and collective concerns. Other-regarding motives can be sustained within individualised competitive systems, but it requires attention to the design of the institutional framework to achieve this (Hoggett et al., Reference Hoggett, Mayo and Miller2006: 770; Matosevic et al., Reference Matosevic, Knapp, Kendall, Henderson and Fernández2007). The compatibility of such value-systems has been examined in psychology in terms of ‘dual-process’ theory (Weyman and Kelly, Reference Weyman and Kelly1999) and in multidisciplinary work that considers the basis of trust in both value commitments and in rational judgement (for a brief review see Poortinga and Pidgeon, Reference Poortinga and Pidgeon2003).

At the level of service providers, one current direction is the enhancement of competitive pressures through short-term contracting and the development of ‘smart contracts’ that focus incentives accurately on the particular aspects of service that are of concern (cf Le Grand, Reference Le Grand2003: 58–63; Dixit, Reference Dixit2002: 718–22). The point about the duality of motives suggests an additional value in pursuing longer-term relationships and seeking to build trust so that the transaction costs are constrained (Scharpf, Reference Scharpf and Bever2007: ch. 7), and suggests that this may be possible in a market context, provided the market nexus does not dominate all interactions.

The second point emerges from the discussion of institutional frameworks and the embedding of social values. This raises the question of whether shifts in the institutional framework erode values supportive of state welfare in the longer term. It is difficult to provide conclusive evidence about such effects. The examples of confused, unexpected and counter-productive outcomes provide grounds for taking the issues seriously. This endorses the case for restraint in the move towards individualised incentive-based systems.