NOVAFRICA Seminar: “Toward an Understanding of the Welfare Effects of Nudges: Evidence from a Field Experiment in Uganda”

On Wednesday, October 31st, at 2.30 pm, the NOVAFRICA Center welcomes Erwin Bulte from Wageningen University & Research, to present his work.

Author:
Erwin Bulte, Wageningen University & Research

Abstract:

Social scientists have recently explored subtle approaches (“nudges”) to encourage certain behaviors across a variety of situations, from energy conservation to healthy dieting. Focusing on how framing of gains and losses affects productivity, we take a step toward understanding the power and welfare implications of nudges by conducting a field experiment in peri-urban Uganda. Comparing output levels across 1000 workers over isomorphic tasks and incentives, framed as either losses or gains, we find that loss aversion can be leveraged to increase the productivity of labor. When subsequently testing whether workers prefer the gain or loss contract, we obtain tentative evidence that the welfare costs of using the loss contract are quite modest. Indeed, some workers value the loss contract more than the gains contract, perhaps due to its commitment features. Beyond providing a first step towards a roadmap for examining welfare effects of other behavioral interventions, our study suggests that one important nudge in the workplace does not come with deleterious effects.

Find more about this seminar here.