The substitution effect of financial and non-financial incentives at different income levels in physician recruitment: evidence from medical students in China

Abstract Background Understanding how individual responses to financial and non-financial incentives is crucial for the recruitment and retention of health workers. However, both incentives are integrated in working practice, and existing theoretical studies have suggested that various income levels may influence the substitution effect of both incentives, while the empirical evidence is lacking. Furthermore, little attention has been paid to the intrinsic motivation. This study aimed to explore the substitution effect of extrinsic incentives at different income levels, also taking intrinsic altruism into account. Methods We used the behavioral data from Zhang et al.’s experiment on medical students. The data combined job choice set through DCEs and altruism quantified by a lab-like experiment. We separated the choice set based on the actual income and distinguished the medical students on altruism. The willingness to pay (WTP) was used to estimate the substitution effect of incentives. Results There was significant substitution effect between non-financial and financial incentives. As the income increased, the non-financial incentives such as excellent work environment, sufficient career development become relatively more important. The impact of the increase in income on the substitution effect was more pronounced among individuals with higher altruism. Concerning the non-financial incentive work environment, in contrast to growth of 546 CNY observed in low-altruism group, the high-altruism group experienced a growth of 1040 CNY in the substitution effect. Conclusions The increase in the income level exerted an influence on the substitution effect of non-financial incentives and financial incentives, especially in high-altruism medical students. Policymakers should attach importance to a favorable environment and promising career prospects on the basis of ensuring a higher income level.