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Posts Tagged ‘incentives’

Cocaine Addicts Prefer Present Cash Over Future Coke

A new study by addiction and neuroscience researchers sheds new light on understanding how cocaine addicts make decisions, and how they value the drug against the immediate and delayed reward of other items, such as cash. The upshot is that addicts discount cocaine at a steeper rate than they do money, consistently choosing to have money now, rather than twice the value of cocaine later. Here’s how the experiment worked:
Forty-seven cocaine addicts (who were all seeking treatment) were asked to guess the number of grams of cocaine worth $1,000. They were each then given a series of choices: cocaine now versus more cocaine later; money now versus more money later; cocaine now versus money later; or money now versus cocaine later. The initial amount offered for the immediate choice has half of the full value, and the delayed amount was always the full value. Preference was almost exclusively given to the money now option, according to the study’s lead researcher, Warren K. Bickel, a psychology professor at Virginia Tech, and director of the Advanced Recovery Research Center there.


Freakonomics Poll: Will New Cigarette Warning Labels Reduce Smoking?

Soon, new warning labels on cigarette packs will have even scarier messages, and photos too. Canada has been doing this for years. Will it reduce smoking?
Here are three quick thoughts.
1) I strongly doubt it will increase the quantity of information about smoking. Folks know it is bad for you already.
2) This does not mean it won’t work. Maybe people try to forget the health risks in that moment of passion (folks know birth control helps prevent pregnancy, but similarly, when faced with impending temptations, magically forget such trivial details). Will these photos remind them at that moment of temptation? Maybe. Or maybe it will increase how often their kids or friends give them grief for it, thus creating some social pressure to stop. Naturally there is a counter-argument, that this may enhance teenage smoking, if “being bad” makes it cooler.


From the Comments: A Market for Skipping Class

We got tons of responses to our Bleg last week on how professors should incentivize classroom attendance. Thank you everyone for your suggestions, a few concerns kept coming up in the comments:

  • Is the student a consumer?
  • Does attending class equate learning?
  • Are students a fair market to judge professors?
  • Do bonus/penalty systems work?

Most readers encouraged making the class interesting enough so that the professor is the sole incentive for students to show up. Others suggested an attendance incentive — ranging from points for showing up, to test questions handed out at the beginning of class — or a policy that puts students’ grades at risk for not showing up.


Dick Gregory and the Old Reverse-Incentive Trick

We’ve blogged a few times about the clever use of what you might call reverse incentives — that is, turning someone else’s unwelcome behavior into a positive outcome for yourself. Planned Parenthood turned abortion protestors into a fund-raising scheme; a comedian used this same “pledge-a-picket” tactic against the Westboro Baptist Church.
I recently ran across an older example, from the groundbreaking comedian and activist Dick Gregory, probably still best known for his autobiography, called Nigger.
The book was co-written by Robert Lipsyte, a longtime Times sports-and-culture columnist whom I interviewed recently for an upcoming podcast about booing. In Lipsyte’s rousing, fascinating new memoir, An Accidental Sportswriter, he writes about his collaboration with Gregory (whom he calls Greg), and the latter’s shrewd understanding of human nature, incentives, and hatred. Excerpts:


Our Daily Bleg: How Should a Professor Incentivize Classroom Attendance?

Art Wright, a professor*, writes in to say:

I have this problem: I am course-planning for the fall term right now, and I’m trying to figure out the best way to develop an attendance policy. Many professors deduct points or letter grades for a certain number of absences. In contrast, I had someone recommend that I give points if students come to most or all of the class meetings. So I’m left wondering: What is the best way to incentivize class attendance for my students? What, in your opinion, will get them to attend most – if not all — of the class meetings?

What advice do you have for Art?
If you’re a professor, let us know what you’ve tried that has worked or failed. If you’re a student or used to be one (I assume that means everyone here), what did it take to get you to show up regularly?
*By the way, Art is a visiting professor of New Testament at the Baptist Theological Seminary at Richmond. Am wondering how readers might answer (or engage with) his question differently if I’d introduced him as such rather than simply as a “professor.” Of all the assumptions we make and biases we carry, it strikes me that religion encourages some of the strongest ones.


A Lesson in Free Vitamins

A friend mentioned an interesting way that the Internet can reduce cost, raise output, and that uses incentives cleverly. Her company created an educational ad campaign to encourage young women to engage in healthy activities. On several occasions various unrelated blogs mentioned that free vitamins were being given through the campaign’s website linked to the ads. Using Google Analytics she discovered that the website’s hits went up over tenfold after each mention on the blogs; but the data also showed that most of the new hits were by people who got onto the website just long enough to get the freebies.
In the next round the offers will be restructured so the freebies are available only after the person has watched an online educational video—and thus imbibed the health-promoting knowledge that was the purpose of the campaign.
[HT: CS]


Lottery Tickets for Safe Drivers?

Last month, Eric Morris wrote a post on red light cameras at traffic intersections in L.A. that sparked a robust debate in the comments section, something we always like. The debate centered around whether these devices are effective at reducing people’s willingness to run a red light, or whether they’re merely sources of revenue for the city. Perhaps you’ll feel similarly passionate about a new Australian study that examined the benefits of fixed speed cameras in New South Wales. From an ABC.net.au article:

On the whole [Auditor-General Peter Achterstraat] has found that speed cameras do change driver behavior and improve road safety but not in all cases. He has found 38 of the 141 fixed cameras across the state seem to have no significant benefit to road safety.


Did Rating Agencies Give Preference to Big Banks?

At the heart of the financial crisis was the market for mortgage-backed securities (MBS). These are the “toxic assets” that larded up bank balance sheets and all but froze the credit markets in the fall of 2008. Turns out a lot of those assets are still sitting there. Though they’ve mostly been downgraded to junk status, many of them began life as gold-plated investment products thanks to the AAA ratings they received from the rating agencies Moody’s, S&P, and Fitch. These firms that allowed so much junk to be passed off as gold were essentially the enablers of the financial crisis.
The relationship between the rating agencies and banks is a perfect case study of flawed incentives. With banks paying them to rate their investment products, and so much money pouring in at the height of the mortgage-boom (driving record profits for the highly competitive rating agencies), Moody’s, S&P, and Fitch had a strong incentive to play along.
A new study adds more fodder to the argument that these agencies were unduly influenced by the institutions whose products they were grading. It basically posits that the more MBS an institution issued, the better rating their stuff received.


An Apparent Non-Money Pricing Anomaly

The City of Austin offers airport parking in three tiers, from garage ($20/day), to close-in surface ($10/day), to distant surface ($7/day). Frequent parkers accumulate points entitling them to free parking days.
The incentives for redeeming the points are bizarre:

Garage 2500 points

Close In 2500 points

Long Term 2500 points

The “price” of a free parking day is the same for the very desirable garage, where I never park if I have to pay $$, and for the close-in parking (where I park for $$ if staying fewer than 5 days) as well as for the long-term (where I park only if staying more than 4 days). Seeing this, we will redeem our 10,000 points for four days in the garage—parking for “free” anywhere else makes no sense. Now if the airlines would only charge the same number of frequent-flyer miles for a trip to Australia as they do for a trip to New York, I would be even better off!


Advancements in Panhandling: Don't Forget to Feed the Meter

Back in 2006, I wrote a Newsweek article about the problems that warm-weather cities like Orlando and Las Vegas were having with their homeless populations, and the rather creative methods they were using to control them — namely banning public feedings and consigning all panhandling to 3-by-15-foot “panhandling zones” painted on sidewalks.
Turns out the solutions have only gotten more creative in the last few years. The newest innovation are “homeless meters,” repurposed parking meters — painted a different color and set back from the street — that people can deposit coins into rather than give spare change to panhandlers. Cities then donate the collected money to nonprofit groups, which in turn use the funds to buy things like bus tickets. Advocates say this cuts down on the abuse of funds, and ensures that donations are put to the best use.


Strike Three: Do MLB Umpires Express Racial Bias in Calling Balls and Strikes?

Our paper on discrimination in baseball has finally been published (June AER). While it received a lot of media and scholarly comment in draft, the final version contained a whole new section. The general idea is that those discriminated against will alter their behavior to mitigate the impacts of discrimination on themselves. But while reducing the impacts, these changes are not costless. For example, if you’re an Hispanic pitcher and think that the white umpire is against you, you’ll change your pitches. Where will you throw? How will you throw?


How to Best Incentivize Organ Donations?

Organ donation is a familiar topic around here. Back in December, we discussed whether there should be a legal market for organs in a podcast episode called “You Say Repugnant, I Say… Lets Do it!” A few weeks ago, we blogged about whether the idea of a legal organ market is losing its stigma. So we were immediately intrigued by news that emerged earlier this month from China, about a 17-year-old boy who had sold his kidney for $3,392 to buy a new iPad 2. From the BBC:

The 17-year-old, identified only as Little Zheng, told a local TV station he had arranged the sale of the kidney over the internet. The story only came to light after the teenager’s mother became suspicious. The case highlights China’s black market in organ trafficking. A scarcity of organ donors has led to a flourishing trade.

The story turned out to be perfect fodder for Michele Goodwin, who has embarked on a three-part series on organ transplantation over at the Chronicle of Higher Education. Goodwin argues that the organ transplant market is far too restrictive, and makes the case for creating better incentives for organ donors in order to undercut the black market.


Winners of Heart + Mind Donations Contest

Earlier I ran a contest for two free copies of More Than Good Intentions. The quick summary: we ran a randomized trial to test whether employing the use of statistics, and worse yet scientific evidence, would raise more or less money when added to a standard emotional appeal in a direct mail marketing solicitation for donations for Freedom from Hunger (a charity I respect and do research with). We split the analysis by size of prior gift. The Freakonomics contest then asked two questions:


Bloomberg BusinessWeek on Economist John List, And How To Incentivize Potty Training

More well-deserved attention for University of Chicago economist John List, whose research is the star of Chapter 3 of SuperFreakonomics and also featured in the last segment of the Freakonomics movie.
Oliver Staley crafts a long piece that both describes some of List’s recent research endeavors and gives the reader a feel for his personality.
Like all economists, apparently, he has a story about potty training his kids:

List believes so strongly in incentives that he offers his own children lottery tickets to do extra math homework, he says. He promised a daughter a trip to Disney World in exchange for her becoming potty trained. The day he made the offer, she used the toilet and was trained, he says.


Heart + Mind? Or Just Heart? Experiments in Aid Effectiveness (And a Contest!)

When signing our book, More Than Good Intentions, Jacob Appel and I often sign “Heart + Mind = Good Giving.” Nobody argues with the premise that we should act with compassion, but be smart about it. Of course nobody would ever say they do not care about the effectiveness of the charity they support.
But in practice, does evidence about charitable effectiveness impact donations? Or does the presentation of dorky evidence turn off the emotions that cause us to donate in the first place?


How To Better Incentivize Labor Economists?

The annual conference that I organize with the Institute for the Study of Labor in Bavaria begins Thursday. Each year we receive about 150 submissions, and pick 24 to fill the available time slots. Typically we’ve had one or two withdrawals, but this year we have five. If I had known this, we would have accepted more papers—the conference works best with 22 or 23 papers. Is there any way to solve this problem? I could accept more papers, but the program would be too long if nobody withdrew. I could require authors of accepted papers to post a bond, perhaps $250, forfeitable if they withdraw. While that sounds very economic, I bet we would get fewer submissions—posting bonds for conference participation is not part of our culture—and possibly even lower average quality submissions.
Of course, I punish those who withdraw by disqualifying them from the conference for the next few years. But other than that, I see no solution.


Smart Kids in Abbottabad

Life is all about incentives, as this paragraph from a New York Times article about Bin Laden makes clear:
“When children playing in the fields let a ball fly into the [Bin Laden] compound by mistake, the owners never let them retrieve it but gave them 50 rupees to buy a new one, said one of the neighbors, a woman with a small boy on her hip who gave her name only as Bibi. When the children began to throw balls into the compound on purpose to get more money, the owners kept paying, she said, laughing.”
(HT Jim Covington)


Layers of Accountability

In this final installment with BizIntelligence.tv (the first two installments can be found here and here), Bruno and I discuss my new seven-step diet plan, The $500 Diet, and how creating “layers of accountability” can enhance your chance of losing weight and keeping it off.


Carrots and Sticks at the RSA

Watch a clip of Freakonomics contributor Ian Ayers speaking to the Royal Society for the Encouragement of Arts, Manufactures and Commerce, about his book, Carrots and Sticks.


Chebyshev Is Ready for her Close Up

In this second installment of my three BizIntelligence TV episodes, you can see my dog, Chebyshev (named after the mathematician who derived Chebyshev’s inequality), and learn what she has to do with Carrots and Sticks.


Wine, Movies and Love

Back in January, on the day of one of the year’s particularly crippling blizzards, I was scheduled to travel to New York City to tape a segment of BizIntelligence TV with Bruno Aziza. The trains that day were running massively late, and I somewhat sheepishly called to cancel. For me, this was a non-discretionary snow day. But Bruno wouldn’t accept defeat. He heroically spent several hours with his camera crew and came to New Haven. They ended up taping three episodes at various places in my house.


Teacher Incentives Ineffective in New York

Roland Fryer continues to work with incentives in education — for students, parents, and teachers. His newest working paper (gated) describes an experiment in New York City that was unsuccessful in moving the needle.


Nudging People to Exercise

Ian Ayres has long advocated the use of commitment contracts in achieving dieting and weight loss goals. Alan M Garber and Jeremy D Goldhaber-Fieber write about their research on commitment contracts and exercise.


A Gym Where It Costs You to Skip a Workout

A lot of people who join gyms or health clubs find it very easy to stop going. Gym-Pact, a new program in Boston, aims to change that. “Gym-Pact offers what [co-founder Yifan] Zhang calls motivational fees: customers agree to pay more if they miss their scheduled workouts, literally buying into a financial penalty if they don’t stick to their fitness plans,” explains Susan Johnston of The Boston Globe.


Mike Leigh Knows Incentives

There’s a great little scene in Mike Leigh’s new-ish film Another Year, which like most Mike Leigh films, is wonderful and also rather depressing (or at least sobering). In this exchange, there’s a wife and husband named Gerri and Tom; they are late middle age, mid-middle class, extremely compatible with each another and have their heads screwed on as right as can be. Their friend Mary works with Gerri and is a sad sack, a deluded and downward-spiraling woman who’s desperate for approval and love and, well anything she can get her hands on. The excerpt from the screenplay, below, can hardly do justice to the excellent acting and direction, but it gives you a sense of what makes Leigh’s films so quietly electric. According to his Wikipedia page, Leigh has been in theater and film his whole life, but when it comes to incentives, he sure thinks like an economist.


More Evidence That Paying for Grades Isn't Easy

As you may have read on this blog, the economist Roland Fryer has done quite a bit of research on bribing kids — i.e., offering financial rewards for good grades. A new working paper from Josh Angrist, Philip Oreopoulos and Tyler Williams examines the effect of financial rewards on performance among an older cohort: college students.


If at First You Don't Succeed …

Last fall, I saw my recidivist coauthor, Barry Nalebuff, and was struck by how much weight he’d lost. He had a clearly different body shape. I told him he looked great. Barry turned to my spouse (and coauthor) Jennifer Brown and said, “I’m doing it on my own, so I don’t have to use that [expletive] stickK.com.”


Wildfires, Cops, and Keggers (Ep. 47)

Next week, dutiful voters will head to the polls for elections. Among the jobs up for grabs are the Kentucky and Mississippi governorships, the mayorship of San Francisco, and a smattering of municipal and state positions across the country. In many of these races, incumbents are fighting to keep their seats.

In our latest Freakonomics Radio on Marketplace podcast (you can download/subscribe at iTunes, get the RSS feed, listen live via the media player above, or read the transcript), we examine the side effects that elections sometimes produce. Steve Levitt wrote about one such effect several years ago (here is the original study, and here’s an update): in mayoral and gubernatorial election years, police forces tend to grow and crime tends to fall.

As Stephen Dubner explains to Kai Ryssdal, incumbents’ incentives change when they run for re-election. They might try to perform better, hiring more police or lowering taxes. But they also might cater more to special interests, giving out election-time favors and even enabling illegal activities.

We went out in search of various election-year anomalies and found some pretty interesting stuff.


The Miami Heat's New Incentives

The Miami Heat has been on fire lately, with a 10-game winning streak. This was how things were supposed to go when the team put together its holy WadeBoshJames trinity, but the season didn’t start out so well.