Publications

This paper reviews the evidence on social incentives, namely on how social interactions with colleagues, subordinates, bosses, customers, and others shape agents’ effort choices in organizations. It proposes a two-way taxonomy based on (a) whether the social group is horizontal (peers at the same level of the hierarchy) or vertical (individuals at different levels within or outside of the organization) and (b) whether the agent’s effort creates externalities for the other members of their social group. It shows settings in which social incentives improve productivity and settings in which they reduce it. In most cases, the size of the effect is approximately 10%, which is half of the typical effect of performance pay. It also shows that social incentives can interfere with financial incentives, making them ineffective or even detrimental. It concludes that social incentives are a powerful motivator that must be taken into account in the design of organizational policies and that more research is needed to understand how policies can shape the preferences that underpin these incentives.

Economists and others have used the results from behavioral economics to justify paternalistic government policies, aimed at changing an individual’s behavior in the present so as to improve that individual’s well-being in the future. Examples include the automatic enrollment in pension schemes and anti-smoking measures, such as banning smoking in public places or proposals for a smoking license. But these - and the economic analyses underlying them – have been challenged on the grounds that they arbitrarily privilege one set of preferences over another. The privileged preferences include those of an ‘inner rational agent’ and those of the future over the present. This paper addresses this criticism and puts forward two new conceptions of - and justifications for – these kinds of policy.

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Public service mutuals are a form of employee-led organization in which service workers spin out of the public sector to form “mutuals” that contract back with government to provide a service.

This article draws on economic and psychological theory to demonstrate that mutuals can align both self-interested and altruistic or public service motivations so as to serve the social good; moreover, by offering greater autonomy to public service professionals, mutuals are predicted to encourage energetic and persistent behaviors. In both cases, there is an advantage over alternative forms of organization such as the public sector bureaucracy, the shareholder-owned private firm, or the nonprofit organization. The employee-led mutual form, however, may not appeal to risk-averse workers, its collective decision-making systems may be inefficient, and external mechanisms may be required to ensure that organizational outcomes are always directed toward the social good.

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To understand altruistic behavior, we must understand the process through which altruism develops and is shaped by the agents' own choices and exogenous factors. We introduce the concept of altruistic capital, which grows with effort devoted to altruistic acts and facilitates future altruism. We illustrate its potential use in the context of banking and conclude by showing that returns to altruistic effort shape the agent's choices and are shaped by external events such as the financial crisis.

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Two children with the same ability and household financial resources can lead very different lives depending on how much human capital investment they receive. In this paper, we use a randomised control trial that taught girls negotiation skills to explore how intra-household bargaining determines human capital investment.

We first study the effects of the training in a lab-in-the-field investment game that simulates parents' educational investment decisions under exogenously varied conditions of communication. Negotiation training leads to better outcomes for daughters when they can communicate with their parents and moves households closer to the efficient frontier.

These findings are consistent with an incomplete contracting model of parental investment, in which imperfectly altruistic parents invest less than is efficient in their daughters, and negotiation allows daughters to develop more cooperative relationships with parents. Crucially, we find that negotiation training significantly improves educational outcomes over the next three years, as measured in administrative data. Using machine learning techniques, we find that these positive effects are concentrated in the top 40% of the ability distribution, including those on the margin of enrolling in school.

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State capacity to provide public services depends on the motivation of the agents recruited to deliver them. We design an experiment to quantify the effect of agent selection on service effectiveness.

The experiment, embedded in a nationwide recruitment drive for a new government health position in Zambia, shows that agents attracted to a civil service career have more skills and ambition than those attracted to “doing good”. Data from a mobile platform, administrative records, and household surveys show that they deliver more services, change health practices, and produce better health outcomes in the communities they serve.

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Should governments save people from themselves? Do governments have the right to influence citizens' behavior related to smoking tobacco, eating too much, not saving enough, drinking alcohol, or taking marijuana—or does this create a nanny state, leading to infantilization, demotivation, and breaches in individual autonomy?

Looking at examples from both sides of the Atlantic and around the world, Government Paternalism examines the justifications for, and the prevalence of, government involvement and considers when intervention might or might not be acceptable. Building on developments in philosophy, behavioral economics, and psychology, Julian Le Grand and Bill New explore the roles, boundaries, and responsibilities of the government and its citizens.

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We conduct a field experiment to evaluate the effect of extrinsic rewards, both financial and non-financial, on the performance of agents recruited by a public health organization to promote HIV prevention and sell condoms. In this setting: (i) non-financial rewards are effective at improving performance; (ii) the effect of both rewards is stronger for pro-socially motivated agents; (iii) the effect of both rewards is stronger when their relative value is higher.

The findings illustrate that extrinsic rewards can improve the performance of agents engaged in public service delivery, and that non-financial rewards can be effective in settings where the power of financial incentives is limited.

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