Papers - Framed

John A List, Jeffrey A Livingston, Susanne Neckermann

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In the face of worryingly low performance on standardized test, offering students financial incentives linked to academic performance has been proposed as a potentially cost-effective way to support improvement. However, a large literature across disciplines finds that extrinsic incentives, once removed, may crowd out intrinsic motivation on subsequent, similar tasks. We conduct a field experiment where students, parents, and tutors are offered incentives designed to encourage student preparation for a high-stakes state test. The incentives reward performance on a separate low-stakes assessment designed to measure the same skills as the high-stakes test. Performance on the high-stakes test, however, is not incentivized. We find substantial treatment effects on the incented tests but no effect on the non-incented test; if anything, the incentives result in worse performance on the non-incented test. We also find evidence supporting the conclusion that the incentives crowd out intrinsic motivation to perform well on the non-incented test, but this effect is only temporary. One year later, students who had been in the incentives treatments perform better than those in the control on the same non-incented test.

Amanda Kowalski

Cited by*: 4 Downloads*: 6

I examine treatment effect heterogeneity within an experiment to inform external validity. The local average treatment effect (LATE) gives an average treatment effect for compliers. I bound and estimate average treatment effects for always takers and never takers by extending marginal treatment effect methods. I use these methods to separate selection from treatment effect heterogeneity, generalizing the comparison of OLS to LATE. Applying these methods to the Oregon Health Insurance Experiment, I find that the treatment effect of insurance on emergency room utilization decreases from always takers to compliers to never takers. Previous utilization explains a large share of the treatment effect heterogeneity. Extrapolations show that other expansions could increase or decrease utilization.

Michael J. Seiler

Cited by*: 0 Downloads*: 5

We test the disjunctive hypothesis as it relates to mortgage contracts and find that a liquidated damages clause shifts one's view of a mortgage from a promise to perform to either a promise to perform or pay compensatory damages. However, when a strategic mortgage default is responsible for the breach, the perceived immorality of this action overwhelms the liquidated damages clause effect in support of the disjunctive thesis. We also find that people's conscious "experimentally stated preference" moral stance on installment loan (mortgages, auto loans, credit card debt and even cell phone contracts) default significantly differs from their subconscious "experimentally revealed preference" moral stance indicating a difference between what people say they believe and what they actually believe.

Alex Imas, Sally Sadoff, Anya Samek

Cited by*: 1 Downloads*: 104

There is growing interest in the use of loss contracts that offer performance incentives as upfront payments that employees can lose. Standard behavioral models predict a tradeoff in the use of loss contracts: employees will work harder under loss contracts than under gain contracts; but, anticipating loss aversion, they will prefer gain contracts to loss contracts. In a series of experiments, we test these predictions by measuring performance and preferences for payoff-equivalent gain and loss contracts. We find that people indeed work harder under loss than gain contracts, as the theory predicts. Surprisingly, rather than a preference for the gain contract, we find that people actually prefer loss contracts. In exploring mechanisms for our results, we find suggestive evidence that people do anticipate loss aversion but select into loss contracts as a commitment device to improve performance.

Raymond C Battalio, Leonard Green, John H Kagel

Cited by*: 22 Downloads*: 70

No abstract available

Esther Duflo, Pascaline Dupas, Michael Kremer, Samuel Sinei

Cited by*: 15 Downloads*: 26

We report results from a randomized evaluation comparing three school-based HIV/AIDS interventions in Kenya: 1) training teachers in the Kenyan Government's HIV/AIDS-education curriculum; 2) encouraging students to debate the role of condoms and to write essays on how to protect themselves against HIV/AIDS; and 3) reducing the cost of education. Our primary measure of the effectiveness of these interventions is teenage childbearing, which is associated with unprotected sex. We also collected measures of knowledge, attitudes, and behavior regarding HIV/AIDS. After two years, girls in schools where teachers had been trained were more likely to be married in the event of a pregnancy. The program had little other impact on students' knowledge, attitudes, and behavior, or on the incidence of teen childbearing. The condom debates and essays increased practical knowledge and self-reported use of condoms without increasing self-reported sexual activity. Reducing the cost of education by paying for school uniforms reduced dropout rates, teen marriage, and childbearing.

Aradhna Krishna, Tayfun Sonmez, M. Utku Unver

Cited by*: 2 Downloads*: 14

No abstract available

Christina M Fong

Cited by*: 1 Downloads*: 4

This paper reports a surprising finding from an experiment on giving to welfare recipients. The experiment tests how offers of money in n-donor dictator games are affected by 1) donors' humanitarian and egalitarian values and 2) direct information about the recipients' work-preferences. People who are self-reported humanitarians and egalitarians have giving that is highly elastic with respect to the apparent worthiness of the recipient. Among high scoring humanitarian-egalitarians, the median offer to a recipient who appeared industrious was $5.00, while the median offer to a recipient who appeared lazy was only $1.00. Among low scoring humanitarian-egalitarians, the median offer was $1.00 in both conditions. I refer to this combination of altruism and equity/reciprocity as empathic responsiveness. This finding can be rationalized by a model of inequity aversion.

Roland Fryer , Steven D Levitt, John A List, Sally Sadoff

Cited by*: 43 Downloads*: 11

Domestic attempts to use financial incentives for teachers to increase student achievement have been ineffective. In this paper, we demonstrate that exploiting the power of loss aversion--teachers are paid in advance and asked to give back the money if their students do not improve sufficiently--increases math test scores between 0.201 (0.076) and 0.398 (0.129) standard deviations. This is equivalent to increasing teacher quality by more than one standard deviation. A second treatment arm, identical to the loss aversion treatment but implemented in the standard fashion, yields smaller and statistically insignificant results. This suggests it is loss aversion, rather than other features of the design or population sampled, that leads to the stark differences between our findings and past research.

Uri Gneezy, Alex Imas, John A List

Cited by*: 2 Downloads*: 6

We introduce a simple, easy to implement instrument for jointly eliciting risk and ambiguity attitudes. Using this instrument, we structurally estimate a two-parameter model of preferences. Our findings indicate that ambiguity aversion is significantly overstated when risk neutrality is assumed. This highlights the interplay between risk and ambiguity attitudes as well as the importance of joint estimation. In addition, over our stakes levels we find no difference in the estimated parameters when incentives are real or hypothetical, raising the possibility that a simple hypothetical question can provide insights into an individuals preferences over ambiguity in such economic environments.