Applied Economics Workshop Business 33610 Autumn Quarter 2010 "self-control at Work: Evidence from a Field Experiment" Self-control at Work: Evidence from a Field Experiment

How important are self-control problems at work? We describe a field experiment with data entry workers designed to answer this question. We examine two proxies for self-control and find evidence on both. First, workers' effort increases as the (randomly assigned) payday gets closer, with productivity increases on paydays corresponding to 7% of mean daily production. Second, when given the choice, workers choose a dominated pay scheme—a linear contract which penalizes workers for not achieving a (self-chosen) threshold—over the same contract without the penalty. Workers also produce and earn 2% more when they have the ability to choose these " commitment contracts ". Both production effects are economically important: as big as ½ a year of schooling. We also find an important mediating role for uncertainty: the potential for exogenous shocks reduces the demand for commitment; this is especially true when commitment choices occur the evening before rather than the morning of the workday (after the uncertainty is resolved). We also find significant heterogeneity. Workers with larger payday effects have greater commitment demand and benefit more from being offered commitment contracts. To a lesser degree, elicited discount rates from monetary tradeoff experiments and subjective measures of self-control predict the commitment demand effects. Finally, we find that these effects neither diminish nor strengthen as workers gain experience. We argue that these results are hard to reconcile with other explanations such as worker confusion, social influences or signaling to employers. Finding an important role for self-control problems at work has implications for a variety of economic phenomena, from the evolution of workplace arrangements during the development experience to contract and workplace design. I. Introduction Introspection suggests we may not work as hard as we would like. Planning for tomorrow, we plan or desire a certain level of work effort, making a trade off between the pain of working and its returns. When tomorrow arrives, however, the costs of work suddenly weigh more heavily and its benefits seem more remote. We end up working less than planned or desired. This kind of time inconsistency in behavior appears to reflect a deeper fact of human life. Increasing data on a variety of economic domains suggest people have self-control problems and time inconsistent preferences (see Frederick et al 2002 and DellaVigna 2009 for reviews). Self control problems at work are particularly interesting because of their far reaching implications: through their effects on earnings, they can impact …