This chapter surveys the contributions of laboratory experiments to labor economics. We begin with a discussion of methodological issues: when (and why) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues? We then summarize the substantive contributions of laboratory experiments to our understanding of principal-agent interactions, social preferences, union-firm bargaining, arbitration, gender differentials, discrimination, job search, and labor markets more generally.
{"title":"Lab Labor: What Can Labor Economists Learn from the Lab?","authors":"G. Charness, P. Kuhn","doi":"10.3386/W15913","DOIUrl":"https://doi.org/10.3386/W15913","url":null,"abstract":"This chapter surveys the contributions of laboratory experiments to labor economics. We begin with a discussion of methodological issues: when (and why) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues? We then summarize the substantive contributions of laboratory experiments to our understanding of principal-agent interactions, social preferences, union-firm bargaining, arbitration, gender differentials, discrimination, job search, and labor markets more generally.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115496686","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study of the root causes of the current extremely high levels of defaults and foreclosures among residential mortgages represents the final report to Congress by the Secretary of the Department of Housing and Urban Development (HUD) pursuant to Section 1517 of the Housing and Economic Recovery Act (HERA) of 2008 (P.L. 110-289). The problems in the mortgage market are routinely referred to as a “foreclosure crisis” because the level of defaults and foreclosures greatly exceed previous peak levels in the post-war era and, as a result, have drawn comparisons to the levels of distress experienced in the Great Depression. This report contains a review of the academic literature and industry press on the root causes of the current foreclosure crisis, data and analysis of trends in the market, and policy responses and recommended actions to mitigate the current crisis and help prevent similar crises from occurring in the future.
{"title":"Report to Congress on the Root Causes of the Foreclosure Crisis","authors":"Christopher E. Herbert, W. Apgar","doi":"10.2139/ssrn.1582496","DOIUrl":"https://doi.org/10.2139/ssrn.1582496","url":null,"abstract":"This study of the root causes of the current extremely high levels of defaults and foreclosures among residential mortgages represents the final report to Congress by the Secretary of the Department of Housing and Urban Development (HUD) pursuant to Section 1517 of the Housing and Economic Recovery Act (HERA) of 2008 (P.L. 110-289). The problems in the mortgage market are routinely referred to as a “foreclosure crisis” because the level of defaults and foreclosures greatly exceed previous peak levels in the post-war era and, as a result, have drawn comparisons to the levels of distress experienced in the Great Depression. This report contains a review of the academic literature and industry press on the root causes of the current foreclosure crisis, data and analysis of trends in the market, and policy responses and recommended actions to mitigate the current crisis and help prevent similar crises from occurring in the future.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"78 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-01-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132435979","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This contribution provides a brief overview and discussion of the role of experiments in economics. It is argued that economic experiments have convinced economists and the public of the existence of phenomena that have been outside the scope of economics. The success of these experiments is partly due to the performative nature of experiments. To develop this argument, examples of experiments are provided, and two different sets of criticisms of experiments are discussed. The paper concludes with a discussion of which questions economists should address and how experiments can be used to study policy-relevant questions. ZUSAMMENFASSUNG - (Experimentelle Praktiken in der Okonomie: Performativitat und die Erzeugung neuer Phanomene) Der Beitrag beschaftigt sich mit der Rolle von Experimenten in der Okonomie. Es wird argumentiert, dass Experimente dazu in der Lage sind, sowohl Okonomen als auch eine breitere Offentlichkeit davon zu uberzeugen, dass bestimmte Phanomene existieren, die vorher nicht als relevant fur die Okonomie angesehen oder gar nicht wahrgenommen wurden. Diese Wirkung von Experimenten beruht zu einem wichtigen Teil auf ihrer Performativitat. Um dieses Argument zu entwickeln, werden Beispiele fur Experimente gegeben, verschiedene Kritikpunkte an Experimenten diskutiert sowie die Frage aufgeworfen, was die Grenzen der Okonomie sind und wie Experimente zur Beantwortung wirtschaftspolitischer Fragen eingesetzt werden konnen.
{"title":"Experimental Practices in Economics: Performativity and the Creation of Phenomena","authors":"Dorothea Kübler","doi":"10.2139/ssrn.1587941","DOIUrl":"https://doi.org/10.2139/ssrn.1587941","url":null,"abstract":"This contribution provides a brief overview and discussion of the role of experiments in economics. It is argued that economic experiments have convinced economists and the public of the existence of phenomena that have been outside the scope of economics. The success of these experiments is partly due to the performative nature of experiments. To develop this argument, examples of experiments are provided, and two different sets of criticisms of experiments are discussed. The paper concludes with a discussion of which questions economists should address and how experiments can be used to study policy-relevant questions. ZUSAMMENFASSUNG - (Experimentelle Praktiken in der Okonomie: Performativitat und die Erzeugung neuer Phanomene) Der Beitrag beschaftigt sich mit der Rolle von Experimenten in der Okonomie. Es wird argumentiert, dass Experimente dazu in der Lage sind, sowohl Okonomen als auch eine breitere Offentlichkeit davon zu uberzeugen, dass bestimmte Phanomene existieren, die vorher nicht als relevant fur die Okonomie angesehen oder gar nicht wahrgenommen wurden. Diese Wirkung von Experimenten beruht zu einem wichtigen Teil auf ihrer Performativitat. Um dieses Argument zu entwickeln, werden Beispiele fur Experimente gegeben, verschiedene Kritikpunkte an Experimenten diskutiert sowie die Frage aufgeworfen, was die Grenzen der Okonomie sind und wie Experimente zur Beantwortung wirtschaftspolitischer Fragen eingesetzt werden konnen.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127536175","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider the problem of measuring social exclusion using qualitative data. We suggest a class of social exclusion indicators deriving the partial orderings associated with dominace for these indicators. We characterize the set of transformations on the distribution of individual deprivation scores underlying the dominace conditions proposed.
{"title":"Social Exclusion Orderings","authors":"S. Chakravarty, Claudio Zoli","doi":"10.2139/ssrn.1522084","DOIUrl":"https://doi.org/10.2139/ssrn.1522084","url":null,"abstract":"We consider the problem of measuring social exclusion using qualitative data. We suggest a class of social exclusion indicators deriving the partial orderings associated with dominace for these indicators. We characterize the set of transformations on the distribution of individual deprivation scores underlying the dominace conditions proposed.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"133 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-12-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126890424","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Introducing school accountability may create incentives for efficiency. However, if the performance measure used does not correct for pupil characteristics, it will lead to an inequitable treatment of schools and create perverse incentives for cream-skimming. We apply the theory of fair allocation to show how to integrate empirical information about the educational production function in a coherent theoretical framework. The requirements of rewarding performance and correcting for pupil characteristics are incompatible if we want the funding scheme to be applicable for all educational production functions. However, we characterize an attractive subsidy scheme under specific restrictions on the educational production function. This subsidy scheme uses only information which can be controlled easily by the regulator. We show with Flemish data how the proposed funding scheme can be implemented. Correcting for pupil characteristics has a strong impact on the subsidies (and on the underlying performance ranking) of schools.
{"title":"School Accountability: (How) Can We Reward Schools and Avoid Cream-Skimming?","authors":"Erwin Ooghe, E. Schokkaert","doi":"10.2139/ssrn.1536399","DOIUrl":"https://doi.org/10.2139/ssrn.1536399","url":null,"abstract":"Introducing school accountability may create incentives for efficiency. However, if the performance measure used does not correct for pupil characteristics, it will lead to an inequitable treatment of schools and create perverse incentives for cream-skimming. We apply the theory of fair allocation to show how to integrate empirical information about the educational production function in a coherent theoretical framework. The requirements of rewarding performance and correcting for pupil characteristics are incompatible if we want the funding scheme to be applicable for all educational production functions. However, we characterize an attractive subsidy scheme under specific restrictions on the educational production function. This subsidy scheme uses only information which can be controlled easily by the regulator. We show with Flemish data how the proposed funding scheme can be implemented. Correcting for pupil characteristics has a strong impact on the subsidies (and on the underlying performance ranking) of schools.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129809381","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Taxation changes the expectations of prospective university students about their future level and uncertainty of after-tax income. To estimate the impact of taxes on university enrollment, we develop and estimate a structural microeconometric model, in which a high-school graduate decides to enter university studies if expected lifetime utility from this choice is greater than that anticipated from starting to work right away. We estimate the ex-ante future paths of the expectation and variance of net income for German high-school graduates, using only information available to those graduates at the time of the enrollment decision, accounting for multiple nonrandom selection and employing a microsimulation model to account for taxation. In addition to income uncertainty, the enrollment model takes into account university dropout and unemployment risks, as well as potential credit constraints. The estimation results are consistent with expectations. First, higher risk-adjusted returns to an academic education increase the probability of university enrollment. Second, high-school graduates are moderately risk averse, as indicated by the Arrow-Pratt coefficient of risk aversion estimated within the model. Thus, higher uncertainty among academics decreases enrollment rates. A simulation based on the estimated structural model indicates that a revenue-neutral, flat-rate tax reform with an unchanged basic tax allowance would increase enrollment rates for men in Germany because of the higher expected net income in the higher income range.
{"title":"Expected Future Earnings, Taxation, and University Enrollment: A Microeconometric Model with Uncertainty","authors":"Frank M. Fossen, D. Glocker","doi":"10.2139/ssrn.1496865","DOIUrl":"https://doi.org/10.2139/ssrn.1496865","url":null,"abstract":"Taxation changes the expectations of prospective university students about their future level and uncertainty of after-tax income. To estimate the impact of taxes on university enrollment, we develop and estimate a structural microeconometric model, in which a high-school graduate decides to enter university studies if expected lifetime utility from this choice is greater than that anticipated from starting to work right away. We estimate the ex-ante future paths of the expectation and variance of net income for German high-school graduates, using only information available to those graduates at the time of the enrollment decision, accounting for multiple nonrandom selection and employing a microsimulation model to account for taxation. In addition to income uncertainty, the enrollment model takes into account university dropout and unemployment risks, as well as potential credit constraints. The estimation results are consistent with expectations. First, higher risk-adjusted returns to an academic education increase the probability of university enrollment. Second, high-school graduates are moderately risk averse, as indicated by the Arrow-Pratt coefficient of risk aversion estimated within the model. Thus, higher uncertainty among academics decreases enrollment rates. A simulation based on the estimated structural model indicates that a revenue-neutral, flat-rate tax reform with an unchanged basic tax allowance would increase enrollment rates for men in Germany because of the higher expected net income in the higher income range.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128342529","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Can tax policy foster the creation of new companies? To answer this question, we assemble a novel country-industry level panel database with data on entry (by incorporation) for 17 European countries between 1997 and 2004. Our analysis is based on recent models of how corporate taxation affects firm’s incorporation decision, We compute effective average tax rates and study how the taxation of corporate income affects entry rates at the country-industry level. Drawing on the political economy literature, we account for the possible endogeneity of taxation. We find a significant negative effect of corporate income taxation on entry rates. The effect is concave and suggests that tax reductions affect entry rates only below a certain threshold tax level. We also find that a reduction in corporate tax rates is more effective in countries with better institutional infrastructure. Our results are robust to alternative measures of effective taxation and to the use of alternative and additional explanatory variables.
{"title":"Entrepreneurship, Firm Entry, and the Taxation of Corporate Income: Evidence from Europe","authors":"Marco Da Rin, Marina Di Giacomo, A. Sembenelli","doi":"10.2139/ssrn.1262204","DOIUrl":"https://doi.org/10.2139/ssrn.1262204","url":null,"abstract":"Can tax policy foster the creation of new companies? To answer this question, we assemble a novel country-industry level panel database with data on entry (by incorporation) for 17 European countries between 1997 and 2004. Our analysis is based on recent models of how corporate taxation affects firm’s incorporation decision, We compute effective average tax rates and study how the taxation of corporate income affects entry rates at the country-industry level. Drawing on the political economy literature, we account for the possible endogeneity of taxation. We find a significant negative effect of corporate income taxation on entry rates. The effect is concave and suggests that tax reductions affect entry rates only below a certain threshold tax level. We also find that a reduction in corporate tax rates is more effective in countries with better institutional infrastructure. Our results are robust to alternative measures of effective taxation and to the use of alternative and additional explanatory variables.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"61 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130807150","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Maarten J. Gijsenberg, H. J. Heerde, M. Dekimpe, M. Dekimpe, J. Steenkamp, V. Nijs
Notwithstanding the fact that advertising is one of the most used marketing tools, little is known about what is driving (i) the timing and (ii) the magnitude of advertising actions. Building on normative theory, the authors develop a parsimonious model that captures this dual investment process. They explain advertising spending patterns as observed in the market, and investigate the impact of company, competitive, and category-related factors on these decisions, thereby introducing the novel concept of Ad-sensor. Analyses are based on a unique combination of (i) weekly advertising data on 748 CPG brands in 129 product categories in the UK, (ii) household panel purchase data, and (iii) data on new product introductions. The analyzed brands include both large and small brands, both frequent and infrequent advertisers, thus providing a morecomplete and correct overview of the market. The results show that advertising spending patterns can be explained as real-life applications of the normative literature, in which advertising andadvertising goodwill management are embedded in dynamic (s,S) inventory systems. Adstock and Ad-sensor show a positive effect on both timing and magnitude decision. Competitive reasoning is found to have little to no effect on advertising decisions, whereas category-related factors do show an impact. The extent to which campaigning strategies are more or less the outcome of advertising goodwill management systems, however, varies across brands as a function of their relative size and advertising frequency.
{"title":"Understanding the Timing and Magnitude of Advertising Spending Patterns","authors":"Maarten J. Gijsenberg, H. J. Heerde, M. Dekimpe, M. Dekimpe, J. Steenkamp, V. Nijs","doi":"10.2139/ssrn.1538262","DOIUrl":"https://doi.org/10.2139/ssrn.1538262","url":null,"abstract":"Notwithstanding the fact that advertising is one of the most used marketing tools, little is known about what is driving (i) the timing and (ii) the magnitude of advertising actions. Building on normative theory, the authors develop a parsimonious model that captures this dual investment process. They explain advertising spending patterns as observed in the market, and investigate the impact of company, competitive, and category-related factors on these decisions, thereby introducing the novel concept of Ad-sensor. Analyses are based on a unique combination of (i) weekly advertising data on 748 CPG brands in 129 product categories in the UK, (ii) household panel purchase data, and (iii) data on new product introductions. The analyzed brands include both large and small brands, both frequent and infrequent advertisers, thus providing a morecomplete and correct overview of the market. The results show that advertising spending patterns can be explained as real-life applications of the normative literature, in which advertising andadvertising goodwill management are embedded in dynamic (s,S) inventory systems. Adstock and Ad-sensor show a positive effect on both timing and magnitude decision. Competitive reasoning is found to have little to no effect on advertising decisions, whereas category-related factors do show an impact. The extent to which campaigning strategies are more or less the outcome of advertising goodwill management systems, however, varies across brands as a function of their relative size and advertising frequency.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123369844","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Thousands of resumes were sent in response to online job postings across multiple occupations in Toronto to investigate why Canadian immigrants, allowed in based on skill, struggle in the labor market. Resumes were constructed to plausibly represent recent immigrants under the point system from the three largest countries of origin (China, India, and Pakistan) and Britain, as well as non-immigrants with and without ethnic-sounding names. In addition to names, I randomized where applicants received their undergraduate degree, whether their job experience was gained in Toronto or Mumbai (or another foreign city), whether they listed being fluent in multiple languages (including French). The study produced four main findings: 1) Interview request rates for English-named applicants with Canadian education and experience were more than three times higher compared to resumes with Chinese, Indian, or Pakistani names with foreign education and experience (5 percent versus 16 percent), but were no different compared to foreign applicants from Britain. 2) Employers valued experience acquired in Canada much more than if acquired in a foreign country. Changing foreign resumes to include only experience from Canada raised callback rates to 11 percent. 3) Among resumes listing 4 to 6 years of Canadian experience, whether an applicant's degree was from Canada or not, or whether the applicant obtained additional Canadian education or not had no impact on the chances for an interview request. 4) Canadian applicants that differed only by name had substantially different callback rates: Those with English-sounding names received interview requests 40 percent more often than applicants with Chinese, Indian, or Pakistani names (16 percent versus 11 percent). Overall, the results suggest considerable employer discrimination against applicants with ethnic names or with experience from foreign firms.
{"title":"Why Do Skilled Immigrants Struggle in the Labor Market? a Field Experiment with Six Thousand Resumes","authors":"Philip Oreopoulos","doi":"10.1257/POL.3.4.148","DOIUrl":"https://doi.org/10.1257/POL.3.4.148","url":null,"abstract":"Thousands of resumes were sent in response to online job postings across multiple occupations in Toronto to investigate why Canadian immigrants, allowed in based on skill, struggle in the labor market. Resumes were constructed to plausibly represent recent immigrants under the point system from the three largest countries of origin (China, India, and Pakistan) and Britain, as well as non-immigrants with and without ethnic-sounding names. In addition to names, I randomized where applicants received their undergraduate degree, whether their job experience was gained in Toronto or Mumbai (or another foreign city), whether they listed being fluent in multiple languages (including French). The study produced four main findings: 1) Interview request rates for English-named applicants with Canadian education and experience were more than three times higher compared to resumes with Chinese, Indian, or Pakistani names with foreign education and experience (5 percent versus 16 percent), but were no different compared to foreign applicants from Britain. 2) Employers valued experience acquired in Canada much more than if acquired in a foreign country. Changing foreign resumes to include only experience from Canada raised callback rates to 11 percent. 3) Among resumes listing 4 to 6 years of Canadian experience, whether an applicant's degree was from Canada or not, or whether the applicant obtained additional Canadian education or not had no impact on the chances for an interview request. 4) Canadian applicants that differed only by name had substantially different callback rates: Those with English-sounding names received interview requests 40 percent more often than applicants with Chinese, Indian, or Pakistani names (16 percent versus 11 percent). Overall, the results suggest considerable employer discrimination against applicants with ethnic names or with experience from foreign firms.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124536107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In economies with weak enforcement of traffic regulations, drivers who adopt excessively risky behavior impose externalities on other vehicles, and on their own passengers. In light of the difficulties of correcting inter-vehicle externalities associated with weak third-party enforcement, this paper evaluates an intervention that aims instead to correct the intra-vehicle externality between a driver and his passengers, who face a collective action problem when deciding whether to exert social pressure on the driver if their safety is compromised. We report the results of a field experiment aimed at solving this collective action problem, which empowers passengers to take action. Evocative messages encouraging passengers to speak up were placed inside a random sample of over 1,000 long-distance Kenyan minibuses, or matatus, serving both as a focal point for, and to reduce the cost of, passenger action. Independent insurance claims data were collected for the treatment group and a control group before and after the intervention. Our results indicate that insurance claims fell by a half to two-thirds, from an annual rate of about 10 percent without the intervention, and that claims involving injury or death fell by at least 50 percent. Results of a driver survey eight months into the intervention suggest passenger heckling was a contributing factor to the improvement in safety.
{"title":"Heckle and Chide: Results of a Randomized Road Safety Intervention in Kenya","authors":"James Habyarimana, W. Jack","doi":"10.2139/ssrn.1392472","DOIUrl":"https://doi.org/10.2139/ssrn.1392472","url":null,"abstract":"In economies with weak enforcement of traffic regulations, drivers who adopt excessively risky behavior impose externalities on other vehicles, and on their own passengers. In light of the difficulties of correcting inter-vehicle externalities associated with weak third-party enforcement, this paper evaluates an intervention that aims instead to correct the intra-vehicle externality between a driver and his passengers, who face a collective action problem when deciding whether to exert social pressure on the driver if their safety is compromised. We report the results of a field experiment aimed at solving this collective action problem, which empowers passengers to take action. Evocative messages encouraging passengers to speak up were placed inside a random sample of over 1,000 long-distance Kenyan minibuses, or matatus, serving both as a focal point for, and to reduce the cost of, passenger action. Independent insurance claims data were collected for the treatment group and a control group before and after the intervention. Our results indicate that insurance claims fell by a half to two-thirds, from an annual rate of about 10 percent without the intervention, and that claims involving injury or death fell by at least 50 percent. Results of a driver survey eight months into the intervention suggest passenger heckling was a contributing factor to the improvement in safety.","PeriodicalId":341058,"journal":{"name":"ERN: Primary Taxonomy (Topic)","volume":"607 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116074479","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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