- Aggregating over Risk and Time in Risky Intertemporal Choice: Which Order?
(with Kirsten Rohde) [full paper]
This paper shows that on average people robustly aggregate first over time and then over risk, or recursively, when evaluating intertemporal lotteries. We measured model-free degrees of positive and negative intertemporal correlation aversion. On average subjects were positive as well as negative correlation averse, which shows that they aggregated first over time or recursively. Degrees of correlation aversion were unaffected by timing of resolution of uncertainty. We compared two framings: one that encouraged subjects to first aggregate over risk, and another one that encouraged them to first aggregate over time. These framings had no impact on degrees of correlation aversion. At the individual level we found heterogeneity in attitudes towards intertemporal correlation with the majority being intertemporal correlation averse or seeking, but a substantial fraction of subjects being insensitive to such correlations. Thus, while the majority does not aggregate first over risk, a substantial fraction does.
- Changing What People Know May Not Change What They Do: Risk Information and Social Distancing Behaviour
Many studies have focused on correcting the exponential growth bias (EGB; i.e., underestimating exponential growth) in the Covid-19 pandemic. This paper tests the effect of providing information through a graphical flyer to neutralize EGB. Apart from eliciting cognitive changes and behaviour intentions during the experiment, I also measure people’s self-reported real-life behaviour one week after. As expected, the information provisions led to cognitive improvements. Paradoxically, the information did not improve behaviour – neither intended nor actual. This study shows that the gap between knowledge and behaviour, in the context of Covid-19 pandemic, consists of two components simultaneously: knowledge-intention gap and intention-behaviour gap. It is important to be aware that “cognitively” communicating public risks, e.g. by providing statistical information, is not enough to nudge behavioural improvement regarding Covid-19. More is needed to impact people’s behaviour. Information about the risk of Covid-19 will be more effective if provided in ways that arouse relevant emotions – a well-known finding from other domains such as donations for identifiable victims.
[Works in Progress ]
- Better Early Than Late: How to Manage “Last Moment Syndrome”?
(with Kirsten Rohde, Bram van Dijk, Thomas Dirkmaat, Evelien van de Veer)
Many large governmental programs – such as census, tax returns, grant application, subsidy application – have to deal with large volumes of submissions that take place right before the deadline. To study how to alleviate the overload during the peak submission period, we conducted two field experiments in a national census that includes submissions from farming enterprises in the Netherlands (N=30,527 in 2016; N=20,662 in 2017). Using randomized-controlled trials, we compared four types of interventions to a control group: 1) setting an earlier non-binding target date for submission; 2) raising awareness and encouraging goal setting with a peak-day calendar; 3) providing reminders on the monetary advantage of “early submission, early evaluation”; 4) providing a checklist of information to help with the burden of preparation. Our results show that setting an earlier target date is a robust, replicable and effective method of nudging towards earlier submission. Out of a sample size of five to seven thousands individuals, the Target Date treatments could on average nudge 4-5% individuals to advance their submissions before the peak-period (two weeks before the deadline) – a result that we could replicate in a second experiment. Awareness Calendar has a relatively smaller effect size of 3%. Early Handling} and Checklist, however, have no effects in changing individuals’ submission time. Our finding could give supportive evidence that anchoring a target date, even when it does not have the power of a deadline, is effective in reducing procrastination.
- Do Monetary Penalties Discourage School Absenteeism Behaviours?
(with Elisabetta Leni)
We study the impact of a policy introduced by the Department of Education of England in 2013. The policy is intended to discourage term-time absenteeism by the deterrence effect of monetary penalties. As a consequence, parents receive fines for pupils’ unauthorised holiday absences. Since the introduction of the regulation, the number of penalties issued has increased by more than six-fold to the point that in 2018-2019 local councils collected more than 5 million GBP from fines. However, reliable evidence concerning the efficacy of the policy is still lacking. Our identification strategy exploits the highly heterogeneous application of the penalty policy across Local Authorities to define treated and control group. Using school-level data on absences released by the Department of Education, we run a diff-in-diff model combined with a coarsened exact matching procedure and perform several robustness checks. Our results indicate that penalties are not effective in reducing absences for holiday reasons.