A New Approach to an Age-old Problem: Solving Externalities by Incenting Workers Directly Robert Metcalfe Becker Friedman Institute for Research in Economics, University of Chicago (with Greer Gosnell, John List) Friday, December 4, 2015 12-1PM Room 103 Taylor Hall (Taylor-Hibbard Room) Abstract: Understanding motivations in the workplace remains of utmost import as economies around the world rely on increases in labor productivity to foster sustainable economic growth. This study makes use of a unique opportunity to “look under the hood” of an organization that critically relies on worker effort and performance. By partnering with Virgin Atlantic Airways on a field experiment that included over 40,000 unique flights covering an eight-month period, we are able to explore how incentives affect captains’ performance. Making use of more than 110,000 captain-level observations, we find that our set of treatments—which included performance information, personal targets, and pro-social incentives—induced captains to improve efficiency in all three key flight areas: pre-flight, in-flight, and post-flight. We estimate that our treatments lowered input costs, improved productive efficiency, and led to a marginal abatement cost of -$250 for a tonne of CO2 over the eight-month experimental period. Methodologically, our approach highlights the potential usefulness of moving beyond an experimental design that focuses on short-run substitution effects, and it also suggests a new way to combat firm-level externalities: target workers rather than the firm as a whole. |
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