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Naturally Occurring Preferences and Exogenous Laboratory Experiments: A Case Study of Risk Aversion

Econometrica 2007 75(2), 433-458 open access
Does individual behavior in a laboratory setting provide a reliable indicator of behavior in a naturally occurring setting? We consider this general methodological question in the context of eliciting risk attitudes. The controls that are typically employed in laboratory settings, such as the use of abstract lotteries, could lead subjects to employ behavioral rules that differ from the ones they employ in the field. Because it is field behavior that we are interested in understanding, those controls might be a confound in themselves if they result in differences in behavior. We find that the use of artificial monetary prizes provides a reliable measure of risk attitudes when the natural counterpart outcome has minimal uncertainty, but that it can provide an unreliable measure when the natural counterpart outcome has background risk. Behavior tended to be moderately risk averse when artificial monetary prizes were used or when there was minimal uncertainty in the natural nonmonetary outcome, but subjects drawn from the same population were much more risk averse when their attitudes were elicited using the natural nonmonetary outcome that had some background risk. These results are consistent with conventional expected utility theory for the effects of background risk on attitudes to risk.

The Environmental Kuznets Curve: Real Progress or Misspecified Models?

The Review of Economics and Statistics 2003 85(4), 1038-1047
We explore the importance of modeling strategies when estimating the emissions-income relationship. Using U.S. state-level panel data on nitrogen oxide and sulfur dioxide emissions, we estimate several environmental Kuznets curves using the standard parametric framework as well as a more flexible semiparametric alternative. Formal statistical comparisons of the results overwhelmingly reject the parametric approach. Moreover, the differences, particularly for sulfur dioxide, are economically significant.

One Swallow Doesn't Make a Summer: New Evidence on Anchoring Effects

American Economic Review 2014 104(1), 277-290 open access
Some researchers have argued that anchoring in economic valuations casts doubt on the assumption of consistent and stable preferences. We present new evidence that explores the strength of certain anchoring results. We then present a theoretical framework that provides insights into why we should be cautious of initial empirical findings in general. The model importantly highlights that the rate of false positives depends not only on the observed significance level, but also on statistical power, research priors, and the number of scholars exploring the question. Importantly, a few independent replications dramatically increase the chances that the original finding is true.

Gender, Competitiveness, and Socialization at a Young Age: Evidence From a Matrilineal and a Patriarchal Society

The Review of Economics and Statistics 2013 95(4), 1438-1443
Recent literature presents evidence that men are more competitively inclined than women. Since top-level careers usually require competitiveness, competitiveness differences provide an explanation for gender gaps in wages and differences in occupational choice. A natural question is whether women are born less competitive or whether they become so through the process of socialization. To pinpoint when in the socialization process the difference arises, we compare the competitiveness of children in matrilineal and patriarchal societies. We find that while there is no difference at any age in the matrilineal society, girls become less competitive around puberty in the patriarchal society.

Estimating Social Preferences and Gift Exchange at Work

American Economic Review 2022 112(3), 1038-1074 open access
We design three field experiments to estimate how workers' social preferences toward their employer motivates their work effort. We vary the pay rates offered to workers, the return to the employer, and employer generosity demonstrated via unexpected gifts. Workers exert effort even without private incentives, but their effort is insensitive to the return to the employer. This is consistent with “warm glow” but not pure altruism. The gifts have no effect on productivity, but engender extra work. This difference is explained partly by the finding that extra work is much more responsive to incentives than is productivity.

The Importance of Being Marginal: Gender Differences in Generosity

American Economic Review 2013 103(3), 586-590
Do men and women have different social preferences? Previous findings are contradictory. We provide a potential explanation using evidence from a field experiment. In a door-to-door solicitation, men and women are equally generous, but women become less generous when it becomes easy to avoid the solicitor. Our structural estimates of the social preference parameters suggest an explanation: women are more likely to be on the margin of giving, partly because of a less dispersed distribution of altruism. We find similar results for the willingness to complete an unpaid survey; women are more likely to be on the margin of participation.

Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator

The Review of Economics and Statistics 2003 85(4), 944-952 open access
This study examines the effects of air quality regulation on economic activity. Anecdotal evidence and some recent empirical studies suggest that an inverse relationship exists between the stringency of environmental regulations and new plant formations. Using a unique county-level data set for New York State from 1980 to 1990, we revisit this conjecture using a seminonparametric method based on propensity score matching. Our empirical estimates suggest that pollution-intensive plants are responding to environmental regulations; more importantly, we find that traditional parametric methods used in previous studies may dramatically understate the impact of more stringent regulations.

The Impact of Management Practices on Employee Productivity: A Field Experiment with Airline Captains

Journal of Political Economy 2020 128(4), 1195-1233 open access
Increasing evidence indicates the importance of management in determining firms' productivity. Yet causal evidence regarding the effectiveness of management practices is scarce, especially for skilled labor in the developed world. In a field experiment measuring commercial airline captains’ productivity, we test four distinct management practices: performance monitoring, performance feedback, target setting, and prosocial incentives. These practices—particularly monitoring and target setting—significantly increase captains' productivity on the targeted fuel-saving dimensions, with positive spillovers on job satisfaction and CO2 emissions. The study reveals an uncharted research opportunity to delve into the black box of firms to examine the determinants of productivity among skilled labor.