Papers - John A List

Ted Gayer, John Horowitz, John A List

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Clear Skies is an economist's approach to pollution reduction. We heartily endorse its core approach, while recommending surgery for a few minor blemishes.

John A List

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Recently an abundance of experimental evidence has been gathered that is consonant with the notion that individual preferences are inconsistent and unstable. These empirical results potentially undermine the theoretical foundation of welfare economics, as the degree of preference liability claimed suggests that perhaps no optimization principles underlie even the most straightforward of choices. Yet policymakers in the environmental arena continue to prescribe policies based on economics-based methods that are constructed on the very principles that have been directly refuted. Are policymakers creatures of habit that move at glacial speed or is there something deeper behind their inertness? In this study, I explore this issue within the U.S. context and argue that there is some rationality behind current public policy decision making. I then explore whether the empirical evidence supports the view that policymakers should take preference anomalies seriously. As a case study, I focus on some of my recent findings on preference inconsistencies in the marketplace.

Craig Gallet, John A List, Peter Orazem

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The 1987 academic market was strong, whereas the 1997 market was weak. A multimarket theory of optimal search suggests that job seekers will respond to a weakening market by changing their search strategies at the extensive margin (which markets to enter) and the intensive margin (how many applications to submit per market). Employers respond to the weakening market by raising their hiring standards. High-quality applicants will obtain an increased share of academic interviews in weak markets while applicants from weaker schools will increasingly secure interviews outside of the academic market. Empirical results show that in the bust market, graduates of elite schools shifted their search strategies to include weaker academic institutions, while graduates of lower-ranked schools shifted their applications away from academia and toward the business sector. In bust conditions, academic institutions increasingly concentrate their interviews on elite school graduates, women, and U.S. residents

Junsoo Lee, John A List, Mark Strazicich

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In this paper we examine temporal properties of eleven natural resource real price series from 1870-1990 by employing a Lagrangian Multiplier unit root test that allows for two endogenously determined structural breaks with and without a quadratic trend. Contrary to previous research, we find evidence against the unit root hypothesis for all price series. Our findings support characterizing natural resource prices as stationary around deterministic trends with structural breaks. This result is important in both a positive and normative sense. For example, without an appropriate understanding of the dynamics of a time series, empirical verification of theories, forecasting, and proper inference are potentially fruitless. More generally, we show that both pre-testing for unit roots with breaks and allowing for breaks in the forecast model can improve forecast accuracy.

John A List, Jason F Shogren, Michael Spencer , Stephen Swallow

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This paper considers how six alternative rebate rules affect voluntary contributions in a threshold public-good experiment. The rules differ by (1) whether an individual can receive a proportional rebate of excess contributions, a winner-takes-all of any excess contributions, or a full rebate of one's contribution in the event the public good is provided and excess contributions exist, and (2) whether the probability of receiving a rebate is proportional to an individual's contribution relative to total contributions or is a simple uniform probability distribution set by the number of contributors. The paper adds to the existing experimental economics literature on threshold public goods by investigating both aggregate and individual demand revelation under the winner-take-all and random full-rebate rules. Half of the rules (proportional rebate, winner-take-all with uniform probability among all group members, and random full-rebate with uniform probability) provide total contributions that nearly equal total benefits, while the rest (winner-take-all with proportional probability, winner-take-all with uniform probability among contributors only, and random full-rebate with proportional probability) exceed benefits by over 30 percent. Only the proportional rebate rule is found to achieve both aggregate and individual demand revelation. Our experimental results have implications for both fundraisers and valuation practitioners.

Omar Al-Ubaydli, Uri Gneezy, John A List, Min Sok Lee

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A stylized fact is that agents respond more acutely to negative than positive stimuli. Such findings have generated insights on mechanism-design, have been featured prominently in policymaking, and more generally have led to discussions of whether preferences are defined over consumption levels or changes in consumption. This study reconsiders this stylized fact. In doing so, it provides insights into an important domain wherein positive stimuli induce a greater response than negative stimuli: a principal-agent game with reputational considerations and with the agent on the market's short end. This common setting represents an important feature of labor markets with involuntary unemployment.

Andreas Lange, John A List, Michael K Price

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Auction theory represents one of the richest areas of research in economics over the past three decades. Yet, whether, and to what extent, the introduction of secondary resale markets influences bidding behavior in sealed bid first-price auctions remains under researched. This study begins by examining field data from a unique data set that includes nearly 3,000 auctions (over 10,000 individual bids) for cutting rights of standing timber in British Columbia from 1996-2000. In comparing bidding patterns across agents who are likely to have resale opportunities with those who likely do not, we find evidence that is consistent with theory. Critical evaluation of the reduced-form bidding model, however, reveals that sharp tests of the theoretical predictions are not possible because several other differences may exist across these bidder types. We therefore use a laboratory experiment to examine if the resale opportunity by itself can have the predicted theoretical effect. We find that while it does have the predicted effect, a theoretical model based on risk-averse bidders explains the overall data patterns more accurately than a model based on risk-neutral bidders. Beyond testing theory, the paper highlights the inferential power of combining naturally occurring data with laboratory data.

Uri Gneezy, Moshe Hoffman, John A List

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We therefore agree with the sentiments of Bailey et al. (1) and Daly (2): Our study should not be viewed as the definitive study on this topic but as a proof of concept, which should propel researchers to exploit this unique sample to its fullest advantage. Further research using noncognitive measures, as well as alternative spatial measures would prove invaluable in addressing some of the shortcomings pointed out by Bailey et al. (1) and Daly (2). Moreover, such research would reveal the generality of our results and could focus activist efforts on traits that are most amenable to nurture. Also, if the measures are chosen to be more or less gender-dimorphic and more or less influenced by motivation, stereotype threat, and training, for example, this research, in addition to addressing some of the astute criticisms of Bailey et al. (1) and Daly (2), could also reveal mechanism, which would likewise be invaluable for focusing activists' efforts. We welcome collaboration with psychologists and anthropologists, such as the experts to whom this letter replies, to help us develop such measures of spatial and nonspatial cognitive abilities that are easy to explain and quick to implement, to take full advantage of this unique sample.

Uri Gneezy, Kenneth Leonard, John A List

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This study uses a controlled experiment to explore whether there are gender differences in selecting into competitive environments across two distinct societies: the Maasai in Tanzania and the Khasi in India. One unique aspect of these societies is that the Maasai represent a textbook example of a patriarchal society whereas the Khasi are matrilineal. Similar to the extant evidence drawn from experiments executed in Western cultures, Maasai men opt to compete at roughly twice the rate as Maasai women. Interestingly, this result is reversed amongst the Khasi, where women choose the competitive environment more often than Khasi men, and even choose to compete weakly more often than Maasai men. We view these results as potentially providing insights into the underpinnings of the factors hypothesized to be determinants of the observed gender differences in selecting into competitive environments.

Richard Carson , Theodore Groves , John A List

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Researchers, using contingent valuation (CV) to value changes in nonmarket goods, typically believe respondents always answer questions truthfully or they answer truthfully only when it is in their interest to do so. The second position, while consistent with economic theory, implies that interpreting survey responses depends critically on the incentive structure provided. We derive simple tests capable of distinguishing the two views. Our theoretical model for examining the incentive structure of a single binary choice relaxes the usual expected utility assumption. We test our theory using a field experiment involving voting to provide a public good. Experimental results are consistent theoretical predictions and cast doubt on the relevance of a large experimental literature using inconsequential questions and non-incentive-compatible mechanisms to make inferences about CV. The framework put forth should help in understanding the role played by theoretical conditions for preference elicitation and lend insight into the hypothetical bias literature.

John A List, Zacharias Maniadis, Fabio Tufano

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In his comment, Mitesh Kataria (2014) makes three main points about a specific part of our paper (Maniadis, Tufano, and List 2014), namely about Tables 2 and 3. In our paper, we employ these tables in order to illustrate the idea that very inconclusive post-study probabilities that a tested phenomenon is true may result from novel, surprising findings. The main arguments in Kataria (2014) are the following: First, if P(H0) is unknown, as is often the case with economic applications, the post-study probability can lead to even worse inference than the Classical significance test, depending on the quality of the prior. Second, the simulation in Maniadis et al. (2014) ignores previous assessments of P(H0) and instead utilizes a selective empirical setup that favors the use of post-study probabilities. [Third,] contrary to what Maniadis et al. (2014) argue, their results do not allow for drawing general recommendations about which approach is the most appropriate. (Kataria 2014, abs.) We believe that our work might have been misunderstood by Kataria. Moreover, it seems that some of his claims are not supported by relevant empirical evidence.

Erwin Bulte, John A List, Qin Tu

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A vibrant literature has emerged that explores the economic implications of the sex ratio (the ratio of men to women in the population), including changes in fertility rates, educational outcomes, labor supply, and household purchases. Previous empirical efforts, however, have paid less attention to the underlying channel via which changes in the sex ratio affect economic decisions. This study combines evidence from a field experiment and a survey to document that the sex ratio importantly influences female bargaining power: as the sex ratio increases, female bargaining power increases.

Daniel Houser, John A List, Anya Samek

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Young children have long been known to act selfishly and gradually appear to become more generous across middle childhood. While this apparent change has been well documented, the underlying mechanisms supporting this remain unclear. The current study examined the role of early theory of mind and executive functioning in facilitating sharing in a large sample (N = 98) of preschoolers. Results reveal a curious relation between early false-belief understanding and sharing behavior. Contrary to many commonsense notions and predominant theories, competence in this ability is actually related to less sharing. Thus, the relation between developing theory of mind and sharing may not be as straightforward as it seems in preschool age children. It is precisely the children who can engage in theory of mind that decide to share less with others.

Omar Al-Ubaydli, Steffen Andersen, Uri Gneezy, John A List

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Constructing compensation schemes for effort in multi-dimensional tasks is complex, particularly when some dimensions are not easily observable. When incentive schemes contractually reward workers for easily observed measures, such as quantity produced, the standard model predicts that unrewarded dimensions, such as quality, will be neglected. Yet, there remains mixed empirical evidence in favor of this standard principal-agent model prediction. This paper reconciles the literature by using both theory and empirical evidence. The theory outlines conditions under which principals can use a piece rate scheme to induce higher quantity and quality levels than analogous fixed wage schemes. Making use of a series of complementary laboratory and field experiments we show that this effect occurs because the agent is uncertain about the principal's monitoring ability and the principal's choice of a piece rate signals to the agent that she is efficient at monitoring.

John A List, Anya Samek

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An active area of research within economics concerns the underpinnings of why people give to charitable causes. This study takes a new approach to this question by exploring motivations for giving among children aged 3-5. Using data gathered from 122 children, our artefactual field experiment naturally permits us to disentangle pure altruism and warm glow motivators for giving. We find evidence for the existence of pure altruism but not warm glow. Our results suggest pure altruism is a fundamental component of our preferences, and highlight that warm glow preferences found amongst adults likely develop over time. One speculative hypothesis is that warm glow preferences are learned through socialization.

Avner Ben-Ner, John A List, Louis Putterman, Anya Samek

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An active area of research within the social sciences concerns the underlying motivation for sharing scarce resources and engaging in other pro-social actions. We develop a theoretical framework that sheds light on the developmental origins of social preferences by providing mechanisms through which parents transmit preferences for generosity to their children. Then, we conduct a field experiment with nearly 150 3-5 year old children and their parents, measuring (1) whether child and parent generosity is correlated, (2) whether children are influenced by their parents when making sharing decisions and (3) whether parents model generosity to children. We observe no correlation of independently measured parent and child sharing decisions at this young age. Yet, we find that apart from those choosing an equal allocation of resources between themselves and another child, children adjust their behaviors to narrow the gap with their parent's or other adult's choice. We find that fathers, and parents of initially generous children, increase their sharing when informed that their child will be shown their choice.

John A List, Anya Samek, Terri Zhu

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We use a field experiment to investigate the effect of incentives on food purchase decisions at a grocery store. We recruit over 200 participants and track their purchases for a period of 6 months, permitting us a glimpse of more than 3,500 individual shopping trips. We randomize participants to one of several treatments, in which we incentivize fresh fruit and vegetable purchases, provide tips for fruit and vegetable preparation, or both. We report several key insights. First, our informational content treatment has little effect. Second, we find an important price effect: modest pecuniary incentives more than double the proportion of dollars spent on produce in the grocery store. Third, we find an interesting pattern of consumption after the experiment ends: even when incentives are removed, the treatment group has higher fruit and vegetable purchases compared to the control group. These long-term results are in stark contrast to either a standard price model or a behavioral model of 'crowd out.' Rather, our results are consonant with a habit formation model. This opens up the distinct possibility that short term incentives can be used as a key instrument to combat obesity.

Dean S Karlan, John A List

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We conducted two matching grant experiments with an international development charity. The primary experiment finds that a matching grant from the Bill and Melinda Gates Foundation raises more funds than a matching grant from an anonymous donor. The effect persists, and is strongest for donors who previously gave to other poverty-oriented charities. Combining these insights with survey results, we conclude that our matching gift primarily works through a quality signal mechanism. Overall, the results help to clarify why people give to charity, what models help to describe those motivations, and how practitioners can leverage economics to increase their fundraising potential.

Tova Levin, Steven D Levitt, John A List

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The wealthiest 10% of donors now give 90% of charitable dollars in the U.S., but little is known about what motivates them. This study uses a natural field experiment, tracking over five thousand high capacity donors, to lend preliminary insights into the world of high capacity givers. On some dimensions, high capacity donors mirror modal donors: there is persistence in giving patterns, signals of program quality influence giving, and the price of giving is not unduly important. Unlike typical small donors, the givers in our data respond only on the intensive margin, and often with a longer time lag. Our study highlights the value to practitioners of partnering with academics, as our intervention has generated $30 million in incremental donations to the University.

Omar Al-Ubaydli, John A List

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A commonly held view is that laboratory experiments provide researchers with more "control" than natural field experiments, and that this advantage is to be balanced against the disadvantage that laboratory experiments are less generalizable. This paper presents a simple model that explores circumstances under which natural field experiments provide researchers with more control than laboratory experiments afford. This stems from the covertness of natural field experiments: laboratory experiments provide researchers with a high degree of control in the environment which participants agree to be experimental subjects. When participants systematically opt out of laboratory experiments, the researcher's ability to manipulate certain variables is limited. In contrast, natural field experiments bypass the participation decision altogether and allow for a potentially more diverse participant pool within the market of interest. We show one particular case where such selection is invaluable: when treatment effects interact with participant characteristics.