Papers - All

Robert Hahn, Robert D Metcalfe

Cited by*: None Downloads*: None

Economic theory suggests that energy subsidies ca lead to excessive consumption and environmental degradation. However, the precise impact of energy subsidies is not well understood. We analyze a large energy subsidy: the California Alternate Rates for Energy (CARE). CARE provides a price reduction for low-income consumers of natural gas and electricity. Using a natural field experiment, we estimate the price elasticity of demand for natural gas to be about -0.35 for CARE customers. An economic model of this subsidy yields three results. First, the natural gas subsidy appears to reduce welfare. Second, the economic impact of various policies, such as cap-and-trade, depends on whether prices for various customers move closer to the marginal social cost. Third, benefits to CARE customers need to increase by 6% to offset the costs of the program.

Aradhna Krishna, Tayfun Sonmez, M. Utku Unver

Cited by*: 2 Downloads*: 14

No abstract available

Dean S Karlan, Jonathan Zinman

Cited by*: 4 Downloads*: 16

The price elasticity of demand for credit has major implications for macroeconomics, finance, and development. We present estimates of this parameter derived from a randomized trial. The experiment was implemented by a consumer microfinance lender in South Africa and identifies demand curves that, while downward-sloping with respect to price, are flatter than recent estimates in both developing and developed countries throughout most of a wide price range. However, demand becomes highly price sensitive at higher-than-normal rates. We discuss several interpretations of this kink and present some related evidence. We also find that loan size is far more responsive to changes in loan maturity than to changes in interest rate. This pattern is more pronounced among lower income individuals, a comparative static that has been observed in the United States as well and is consistent with liquidity constraints that decrease with income.

Frode Alfnes, Maren E Bachke, Mette Wik

Cited by*: 1 Downloads*: 27

Most charity organizations depend on contributions from the general public, but little research is conducted on donor preferences. Do donors have geographical, recipient, or thematic preferences? We designed a conjoint analysis experiment in which people rated development aid projects by donating money in dictator games. We find that our sample show strong age, gender, regional, and thematic preferences. Furthermore, we find significant differences between segments. The differences in donations are consistent with differences in donors' attitudes toward development aid and their beliefs about differences in poverty and vulnerability of the recipients. The method here used for development projects can easily be adapted to elicit preferences for other kinds of projects that rely on gifts from private donors.

Glenn W Harrison, Morten I Lau, Elisabet E Rutstrom, Melonie B Williams

Cited by*: 29 Downloads*: 303

We design experiments to jointly elicit risk and time preferences for the adult Danish population. The experimental procedures build on laboratory experiments that have been evaluated using traditional subject pools. The field experiments utilize field sampling designs that we developed, and procedures that were chosen to be relatively transparent in the field with non-standard subject pools. Our overall design was also intended to be a general template for such field experiments in other countries. We examine the characterization of risk over a wider domain for each subject than previous experiments, allowing more precise estimates of risk attitudes. We also examine individual discount rates over six time horizons, as the first stage in a panel experiment in which we revisit subjects to test consistency and stability of responses over time. Risk and time preferences are heterogeneous, varying by observable individual characteristics. On a methodological level, we implement a refinement of existing procedures which elicits much more precise estimates, and also mitigates framing effects.

Johanne Boisjoly, Greg Duncan, Jacque Eccles, Michael Kremer, Dan Levy

Cited by*: 0 Downloads*: 9

Mixing across racial and ethnic lines could spur understanding or inflame tensions between groups. We find that white students at a large state university randomly assigned African American roommates in their first year were more likely to endorse affirmative action and view a diverse student body as essential for a high-quality education. They were also more likely to say they have more personal contact with, and interact more comfortably with, members of minority groups. Although sample sizes are too small to provide definitive evidence, these results suggest students become more empathetic with the social groups to which their roommates belong.

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.

Daniel Henderson , John A List, Daniel L Millimet, Christopher Parmeter , Michael K Price

Cited by*: 1 Downloads*: 4

Nonparametric estimators provide a flexible means of uncovering salient features of auction data. Although these estimators are popular in the literature, many key features necessary for proper implementation have yet to be uncovered. Here we provide several suggestions for nonparamteric estimation of first-price auction models. Specifically, we show how to impose monotonicity of the equilibrium bidding strategy; a key property of structural auction models not guaranteed in standard nonparametric estimation. We further develop methods for automatic bandwidth selection. Finally, we discuss how to impose monotonicity in auctions with differering number of bidders, reserve prices, and auction-specific characteristics. Finite sample performance is examined using simulated data as well as experimental auction data.

Santosh Anagol, Vimal Balasubramaniam, Tarun Ramadorai

Cited by*: 2 Downloads*: 24

Winners of randomly assigned initial public offering (IPO) lottery shares are significantly more likely to hold these shares than lottery losers 1, 6, and even 24 months after the random allocation. This effect persists in samples of wealthy and highly active investors, suggesting along with additional evidence that this type of "endowment effect" is not solely driven by portfolio inertia or wealth effects. The effect decreases as experience in the IPO market increases, but persists even for the most experienced investors. These results suggest that agents' preferences and/or beliefs about an asset are not independent of ownership, providing field evidence derived from the behavior of 1.5 million Indian stock investors which is in line with the large laboratory literature documenting endowment effects. We evaluate the extent to which prominent models of endowment effects and/or investor behavior can explain our results. A combination of inattention and non-standard preferences (realization utility) or non-standard beliefs (salience based probability distortions) appears most consistent with our findings.

John A List

Cited by*: None Downloads*: None

In the past several decades academics and policymakers have grappled with how to augment the traditional classroom approach to enhance critical thinking skill formation. In this not, I take a different approach. I begin by developing a Critical Thinking Hierarchy, where from the bottom of the hierarchy upwards two key skills evolve: developing/assimilating empirical evidence to update one's beliefs (connecting the dots with empiricism) and putting the puzzle pieces together with conceptual reasoning (connecting the dots with abstract thought). Skills lower down in the hierarchy must be achieved before individuals can gain skills higher up. A key aspect of the CT skill formation process revolves around student's maturation from "fast thinking" to "slow thinking". My overall approach is useful because it at once defines critical thinking, pinpoints where improvements must be made for development, and provides a classroom playbook to enhance critical thinking skill formation.

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.

Henk Folmer, Tim Jeppesen, John A List

Cited by*: 19 Downloads*: 20

Stricter environmental regulations are often opposed on the grounds that they will alter equilibrium capital flows. Empirical evidence in this area remains largely unresolved, mainly due to the quite disparate results found in the literature. This paper takes a positive look at the relationship between new manufacturing plant location decisions and environmental regulations by examining data from 11 studies that provide more than 365 observations. One major result from our meta-analysis is that methodological considerations play a critical role in shaping the body of received estimates. Our empirical estimates also lend insights into future research that is necessary before any robust conclusions can be made regarding the effects of environmental regulations on capital flows.

Daron Acemoglu, David Laibson , John A List

Cited by*: 4 Downloads*: 13

Internet-based educational resources are proliferating rapidly. One concern associated with these (potentially transformative) technological changes is that they will be disequalizing - as many technologies of the last several decades have been - creating superstar teachers and a winner-take-all education system. These important concerns notwithstanding, we contend that a major impact of web-based educational technologies will be the democratization of education: educational resources will be more equally distributed, and lower-skilled teachers will benefit. At the root of our results is the observation that skilled lecturers can only exploit their comparative advantage if other teachers complement those lectures with face-to-face instruction. This complementarity will increase the quantity and quality of face-to-face teaching services, potentially increasing the marginal product and wages of lower-skill teachers.

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.

Glenn W Harrison, Morten I Lau, Elisabet E Rutstrom, Melonie B Williams

Cited by*: 219 Downloads*: 30

We estimate individual discount rates with respect to time streams of money using controlled laboratory experiments. These discount rates are elicited by means of field experiments involving real monetary rewards. The experiments were carried out across Denmark using a representative sample of 268 people between 19 and 75 years of age. Individual discount rates are estimated for various households differentiated by socio-demographic characteristics such as income and age. Our conclusions are that discount rates are constant over the 12-month to 3-year horizons used in these experiments, and that discount rates vary substantially with respect to several socio-demographic variables. Hence we conclude that it would be reasonable to assume constant discount rates for specific household types, but not the same rates across all households.

Glenn W Harrison, Morten I Lau, Elisabet E Rutstrom

Cited by*: 378 Downloads*: 31

We estimate individual risk attitudes using controlled experiments in the field in Denmark. The experiments were carried out across Denmark using a representative sample of 253 people between 19 and 75 years of age. Risk attitudes are estimated for various individuals differentiated by socio-demographic characteristics. Our results indicate that the average Dane is risk averse, and that risk neutrality is an inappropriate assumption to apply. We also find that risk attitudes vary significantly with respect to several important socio-demographic variables such as age and education. However, we do not find any effect of sex on risk attitudes. Copyright The editors of the "Scandinavian Journal of Economics" 2007 .

Stefano DellaVigna, John A List, Ulrike Malmendier, Gautam Rao

Cited by*: 13 Downloads*: 66

We design a model-based field experiment to estimate the nature and magnitude of workers' social preferences towards their employers. We hire 446 workers for a one-time task. Within worker, we vary (i) piece rates; (ii) whether the work has payoffs only for the worker, or also for the employer; and (iii) the return to the employer. We then introduce a surprise increase or decrease in pay ('gifts') from the employer. We find that workers have substantial baseline social preferences towards their employers, even in the absence of repeated-game incentives. Consistent with models of warm glow or social norms, but not of pure altruism, workers exert substantially more effort when their work is consequential to their employer, but are insensitive to the precise return to the employer. Turning to reciprocity, we find little evidence of a response to unexpected positive (or negative) gifts from the employer. Our structural estimates of the social preferences suggest that, if anything, positive reciprocity in response to monetary 'gifts' may be larger than negative reciprocity. We revisit the results of previous field experiments on gift exchange using our model and derive a one-parameter expression for the implied reciprocity in these experiments.

Peter Bohm

Cited by*: 96 Downloads*: 80

The purpose of this paper is to describe a test involving five different approaches to estimating the demand for a public good. The test was conducted in a setting which permitted a real collective choice and in which each subject was committed to actual payments when relevant. The results indicate that the well-known risk for misrepresentation of preferences in this context may have been exaggerated. The test would seem to encourage further work in the field of experimental economics.

Jay R Corrigan, Matthew C Rousu

Cited by*: 0 Downloads*: 11

Firms spend billions of dollars annually on new product and label designs in order to attract and retain customers. The issue of labeling is also important to government agencies and nonprofit labeling organizations. For example, the U.S. Food and Drug Administration has an organizational body in its Office of Nutritional Products that deals with issues of food and dietary supplement labeling. The U.S. Department of Agriculture's Food Safety and Inspection Service also deals with labeling through its Labeling and Consumer Protection Staff. These government agencies spend millions of dollars trying to ensure that food labels adequately inform consumers. One issue that has not been examined is the welfare difference to consumers from alternative labeling schemes/regulations. It seems likely that different labels would differ in effectiveness at informing consumers.

Peter Bohm

Cited by*: 7 Downloads*: 22

The main purpose of this article is to advance a set of conditions which demand-revealing mechanisms must pass in order to be politically acceptable for real-world applications and - to begin with - for real-world experiments. Without such non-laboratory experiments, real progress seems unlikely to take place in this field. So far, there are few indications that these conditions can be met with respect to the proposals made in the literature on public goods. One possible example of a mechanism that meets the ""acceptability"" conditions is given here. In addition, we present some comments as to why demand-revealing mechanisms constitute and important economic problem, a view which has recently been questioned.