Tuesday, September 10, 2013

Nudge Database X

This is Part 10 of the Nudge Database.
Part I || Part II || Part III || Part IV || Part V || Part VI || Part VII || Part VIII || Part IX || @Makeuya

Nudge: A natural field experiment in Norway worked with a household appliances retailer to encourage more energy-efficient purchases. An information treatment condition provided labels showing the cost of the products’ lifetime energy consumption. A training treatment provided training to sales staff. Neither treatment had any effect on the purchase of fridge freezers but they resulted in more energy efficient tumbler driers sold by 4.9% and 3.4% respectively.

Tags: energy efficiency

Source: Kallbekken et al. (2012), ‘Bridging the Energy Efficiency Gap: A Field Experiment on Lifetime Energy Costs and Household Appliances’, Journal of Consumer Policy

Nudge: The authors conducted an RCT where the default settings on office thermostats in an OECD office building were manipulated during the winter heating season. Employees’ chosen thermostat settings were observed over a 6 week period. They find that (i) a 1°C decrease in the default caused a reduction in the chosen setting by 0.38°C on average and (ii) office occupants who are more apt to adjust their thermostats prior to the intervention were less susceptible to the default.

Tags: energy / defaults

Source: Brown et al. (2013), 'Testing the effect of defaults on the thermostat settings of OECD employees', Energy Economics

Nudge: The authors conduct a field experiment with the IRS to examine why people fail to collect benefits they are eligible for. They sent letters to 35,050 California taxpayers who filed their taxes but didn’t claim their 2009 Earned Income Tax Credit (EITC) despite being eligible for it. They varied the text of the mailings to create 3 different conditions: (1) The Control group received a standard letter, (2) there was a Simplification treatment and (3) a Display of benefit treatment .

The results show that all the mailings substantially increase the likelihood of subsequent year take-up, with the two treatments being more effective than the control. The authors project that applying the tested interventions to all filing non-claimants could reduce incomplete take-up among filers from 10% to 7%.

Tags: salience / disclosure / tax

Source: Bhargava & Manoli (forthcoming), ‘Why are Benefits Left on the Table? Assessing the Role of Information, Complexity, and Stigma on Take-up with an IRS Field Experiment’, American Economic Review

Nudge: The authors conducted a field experiment using experimental economists as subjects. They sent letters to economists who submitted papers to the Economic Science Association 2006 meeting in Nottingham. One sentence was varied in the letter to vary between (1) discount and (2) penalty framings.

“We take this opportunity to remind you that [(1) the discounted conference fee for early registration is available until / (2) the conference fee will include a penalty for late registration after] 10 July 2006.

They find that while the behaviour of junior experimental economists is affected by the framing, the senior members of the subject pool are unaffected.

Tags: framing

Source: Gächter et al. (2009) 'Are experimental economists prone to framing effects? A natural field experiment', Journal of Economic Behavior & Organization

Nudge: The authors examine the $35 billion bank overdraft market. Specifically the authors are concerned with whether overdraft fees are sufficiently salient for most people. They issued 21 surveys about overdraft fees between 2004-2008 to over 7,000 participants.

They find that when people take the surveys, they are less likely to incur a fee in the following month. When they take several surveys, the likelihood of paying overdraft fees is significantly reduced for up to 2 years. This reduction comes not from increasing balances but from making fewer debit transactions and cancelling automatic recurring withdrawals. This indicates that the act of taking the survey is itself a kind of treatment, one that is effective at changing overdraft-related behaviour.

Tags: salience / bank overdrafts / survey treatment effects

Source: Stango & Zinman (2011), ‘Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees’, NBER Working Paper

Nudge: The authors examine whether completing a household survey changes the later behavior of the participants. This paper describes five field studies, two concerned with microlending and three with health. Subjects in the treatment groups were randomly assigned to receive a survey about household finances and the authors later followed up to check their subsequent use of a related product.

In the health studies the authors find that being surveyed increases the use of water treatment products and increases take-up of medical insurance. In the micro-lending studies however, and in contrast to the paper above, they found no effect of surveys on borrowing behavior.  

Tags: salience / surveys / health insurance

Source: Zwane et al. (2011) ‘Being surveyed can change later behavior and related parameter estimates’, PNAS

Nudge: The Nutrition Labeling and Education Act (NLEA) required most food products to include a nutrition label. Prior to the NLEA labeling was voluntary. This study uses nutrition label information and supermarket scanner data pre and post-NLEA to examine the impact of moving from a voluntary to mandatory labeling regime on consumer product choice.

Prior to the NLEA all low-fat salad dressings had a nutrition label, while the majority of the higher fat dressings did not. However, there remained large variation in fat content among dressings that did not voluntarily label. Those with the highest fat levels experienced a significant decline in sales after they were required to disclose. The results indicate that even in markets with credible, low-cost mechanisms to disclose, mandatory labeling can have an impact on consumer behavior and health.

Tags: mandated disclosure / health

Source: Mathios (2000), ‘The Impact of Mandatory Disclosure Laws on Product Choices: An analysis of the Salad Dressing Market’, Journal of Laws and Economics

Nudge: The authors use a survey and an experiment with participants in Mexico’s privatized social security system to examine (1) how financial literacy impacts workers’ choices and (2) how simplifying information on management fees may increase measures of price elasticity sensitivity among the financially illiterate.

They find that when presenting fees in pesos instead of annual percentage rates, financially illiterate workers focus much more on fees when choosing between investment funds and select funds with lower average fees. Even though changes in information have small impacts on the fees of the selected fund, the changes in choice behavior imply a substantial increase in price sensitivity. Hence, the way in which information is presented to workers can have a substantial impact on optimal fees that firms can charge in the marketplace.

Tags: framing / investments / simplification

Source: Hastings & Tejeda-Ashton (2008), 'Financial literacy, information, and demand elasticity: survey and experimental evidence from Mexico', NBER Working Paper

Nudge: The authors conducted a field experiment at a national chain of payday stores to examine the effectiveness of mandated disclosure with the goal of helping payday-loans borrowers overcome cognitive biases or limitations. Chief among these is a common failure to appreciate the true annualized interest rate of the loans, which run in several thousand percent. The disclosure information they provide includes annualized rates of interest, credit-card comparisons and peer usage statistics.

They find that information that showing the adding-up effect of loan fees over several pay-cycles helps people think less narrowly about finance costs and results in 11% less borrowing in the subsequent 4 months.

Tags: disclosure / borrowing

Source: Bertrand & Morse (2011), ‘Information disclosure, cognitive biases, and payday borrowing’, Journal of Finance

Nudge: The author describes a psychological model that seeks to explain what kind of feedback about energy-efficient goods will lead to reduced consumption. The author tentatively posits that the most successful feedback combines these features; (1) it’s given frequently and over a long time, (2) it provides an appliance-specific breakdown, (3) it’s presented in a clear and appealing way and (4) it uses computerized, interactive tools.

Tags: energy efficiency

Source: Fischer (2008), ‘Feedback on household electricity consumption: A tool for saving energy?’, Energy Efficiency

1 comment:

Diane Cain said...

Thank you so much for sharing all of the good info! I am looking forward to checking out more posts!