Papers - Natural

John A List, Warren McHone

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In this article, we use annual (1980-90) county-level manufacturing plant location data for New York State to examine the effects of the 1977 Clean Air Act Amendments on the location decisions of new pollution-intensive manufacturing plants in the "neo-regulatory" (1980-84) and "mature-regulatory" (1985-90) phases of the Act's implementation. Our results suggest that the temporal effects of regulation vary. Whereas the location decisions of pollution intensive manufacturing firms were unaffected by the Act's regulatory restrictions in the "neo-regulatory" period, the restrictions appear to have had a significant negative impact on the location decisions of these types of firms in the Act's "mature-regulatory" phase. The diversion of new pollution intensive plants to counties with less stringent environmental regulations suggests that current US environmental regulations may be leading to a "browning process" whereby counties historically free of pollution become havens for polluters.

Anya Samek, Roman Sheremeta

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Recognizing donors by revealing their identities is important for increasing charitable giving. We conducted a field experiment to examine how different recognition methods impact giving, and found that all forms of recognition that we examined had a positive impact on increasing donations, whereby recognizing only highest donors (positive recognition) and recognizing only lowest donors (negative recognition) had the most pronounced effect. We argue that selective recognition (both positive and negative) creates tournament-like incentives. Recognizing the highest donors activates the desire to seek a positive prize of prestige, thus increasing the proportion of donors who contribute large amounts. Recognizing the lowest donors activates the desire to avoid a negative prize of shame, thus decreasing the proportion of donors who do not contribute or contribute very little. Therefore, selective recognition is an effective tool that can be used in the field by charities to increase donations.

Jeffrey A Livingston

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Problems that arise in online markets due to asymmetric information are exacerbated by the fact that transactions in these markets are completely anonymous. The online auction mechanism provided by eBay is an example of such a market. To combat the anonymity problem, eBay allows sellers to become "ID Verified" by paying a small fee to have their identity confirmed by a credit information company. Doing so may reassure potential bidders that the seller is legitimate since their identity is known, and there is more assurance that the seller could be tracked down and punished should a problem arise. Identifying the effect of ID verification is difficult using naturally occurring data, however, because the service tends to be used only by sellers who have a well-established reputation. It is thus difficult to determine whether an improved outcome is due to the seller's reputation or due to ID verification. This study alleviates this concern by conducting a field experiment where items are sold with different IDs that have different characteristics, and finds little evidence that bidders place any value on ID verification.

Craig Gallet, John A List

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This paper uses market share data to infer the nature of rivalry in the U.S. cigarette industry over the 1934-94 period. Unlike previous studies, which measure rivalry from various constructs of market share instability, we examine the time-series properties of market shares to determine whether or not rivalry is evident. Our empirical results imply that a majority of firm-level market shares are martingales, suggesting market shares have been unstable from 1934-94. This result leads us to conclude that rivalry in the cigarette industry has remained strong.

Tobias Heldt

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In a natural experiment, this paper studies the impact of an informal sanctioning mechanism on individuals' voluntary contribution to a public good. Cross-country skiers' actual cash contributions in two ski resorts, one with and one without an informal sanctioning system, are used. I find the contributing share to be higher in the informal sanctioning system (79 percent) than in the non-sanctioning system (36 percent). Previous studies in one-shot public good situations have found an increasing conditional contribution (CC) function, i.e. the relationship between expected average contributions of other group members and the individual's own contribution. In contrast, the present results suggest that the CC-function in the non-sanctioning system is non-increasing at high perceived levels of others' contribution. This relationship deserves further testing in lab.

Donald P Green

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This essay summarizes the results of a large-scale randomized experiment conducted during the 2000 election campaign by the NAACP National Voter Fund, which sought to mobilize African-American voters. Focusing solely on the direct mail and phone banking components of the NAACP-NVF campaign, this study examines the voting behavior of 980,208 participants residing in single-voter households, 1.7 percent of whom were randomly assigned to a control group. The experiment permits us to estimate (1) the extent to which the National Voter Fund's phone calls and direct mail increased voter turnout and (2) the approximate cost per vote. Within this sample, the NVF's two pieces of GOTV mail, three live phone calls, and two recorded phone calls had modest effects, generating approximately 7,100 additional votes at $158 per vote. The upper bound of a 90 percent confidence interval puts these figures at 16,214 additional votes at $69 per vote.

Alan S Gerber, Donald P Green, David W Nickerson

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No abstract available

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.

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.

Junsoo Lee, John A List

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Despite its growth in other areas of economics,time series econometric methods have not been widespread in the area of environmental and resource economics. We illustrate one use of time series methods by examining the time path of US nitrogen oxide (NOx) emission data over the period 1900-1994. The analysis highlights that proper time series methods can aid in optimal regulatory policy as well as developing empirical verification of theories put forth to explain economic phenomena. In addition, several interesting results emerge. First, we find that the emissions series contains both a permanent and random component. Second, if one attributed all of the emissions reductions to regulatory policy, intervention analysis suggests that the 1970 Clean Air Act(CAA) did not merely have transitory effects,but permanently influenced the NOx emission path. In terms of total regulatory impact, an upper bound on the emissions saved due to the 1970 CAA is in the range of 27%-48%.

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.

Ryan D Friedrichs

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No abstract available

Bruno S Frey, Stephan Meier

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People behave pro-socially in a wide variety of situations that standard economic theory is unable to explain. Social comparison is one explanation for such pro-social behavior: people contribute if others contribute or cooperate as well. This paper tests social comparison in a field experiment at the University of Zurich. Each semester every single student has to decide whether he or she wants to contribute to two Social Funds. We provided 2500 randomly selected students with information about the average behavior of the student population. Some received the information that a high percentage of the student population contributed, while others received the information that a relatively low percentage contributed. The results show that people behave pro-socially, conditional on others. The more others cooperate, the more one is inclined to do so as well. The type of person is important. We are able to fix the "types" by looking at revealed past behavior. Some persons seem to care more about the pro-social behavior of others, while other "types" are not affected by the average behavior of the reference group.

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

Egil Matsen, Bjarne Strom

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This paper examines data from the Norwegian television game show Joker, where contestants make well-specified choices under risk. The game involves very large stakes, randomly drawn contestants, and ample opportunities for learning. Expected utility (EU) theory gives a simple prediction of choice under weak conditions, as one choice is always first-order stochastically dominating. We document frequent, systematic and costly violations of dominance. Most alternative theories fail to add explanatory power beyond the EU benchmark, but many contestants appear to have a systematic expectation bias that can be related to Tversky and Kahneman's (1973) "availability heuristic". In addition, there seems to be a stochastic element in choice that is well captured by the so-called Fechner model.

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.

Nick Drydakis

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In the spirit of the International Labour Organisation Code (2001) of decent work and respect for the human rights and dignity of persons infected or affected by HIV/AIDS, there should be no discrimination against applicants for work on the basis of real or perceived HIV status. Whilst, the successful implementation of an HIV/AIDS policy requires cooperation and trust between firms and employees, with the active involvement of workers infected and affected by HIV/AIDS (ILO [2007]). In the current study having considered the fundamental points the first ever correspondence testing was conducted in order to test whether job applicants living with HIV (still) face prejudices in the crucial stage of the selection process in Greece. Resumes differed only in applicants' health status were faxed to advertised job openings. We suggest that a HIV-positive applicant may want to identify whether firms are prone to provide any reasonable adjustments for the recruitment and interview process. Definitely, the outcomes must imply that employers use health condition as a factor when reviewing resumes, which matches the legal definition of discrimination. The rate of net discrimination against male (female) HIV positives is found to be between 82.6% and 97.8% (81.6%-98.8%) among sectors. Whilst, the degree of discrimination is randomly assigned across occupations disrelated to education level and job status. The current study initiates a key methodology which can drive world-wide researchers to conduct relevant surveys. As efforts grow up to address HIV discrimination, so does the need for a set of standard tested and validated discrimination indicators. Measurements and discrimination trends are a key tool for identifying effective anti-stigma programming.

Nick Drydakis

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This research examines the possible discrimination faced by gay men compared to heterosexuals when applying for jobs in the Greek private sector. This issue was addressed through the observation of employer hiring decisions. Mailing pairs of curriculum vitae, distinguished only by the sexual orientation of the applicants, led to the observation that gay men faced a significantly lower chance of receiving an invitation for an interview. However, in cases where employers called applicants back, the wages offered did not differ significantly between gay and heterosexual applicants. Nevertheless, there is substantial evidence to suggest that discrimination based on sexual orientation does exist in the Greek labour market, and at alarmingly high levels.

Andries de Grip, Jan Sauermann

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This paper analyses the effects of work-related training on worker productivity. To identify the causal effects from training, we combine a field experiment that randomly assigns workers to treatment and control groups with panel data on individual worker performance before and after training. We find that participation in the training programme leads to a 10 percent increase in performance. Moreover, we provide experimental evidence for externalities from treated workers on their untreated teammates: An increase of 10 percentage points in the share of treated peers leads to a performance increase of 0.51 percent. We provide evidence that the estimated effects are causal and not the result of employee selection into and out of training. Furthermore, we find that the performance increase is not due to lower quality provided by the worker.