A New Approach to an Age-Old Problem: Solving Externalities by Incenting Workers Directly

Greer K. Gosnell, John List and Robert Metcalfe ()

No 22316, NBER Working Papers from National Bureau of Economic Research, Inc

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 includes over 40,000 unique flights covering an eight-month period, we explore how information and incentives affect captains’ performance. Making use of more than 110,000 captain-level observations, we find that our set of treatments—which include performance information, personal targets, and prosocial incentives—induces captains to improve efficiency in all three key flight areas: pre-flight, in-flight, and post-flight. We estimate that our treatments saved between 266,000-704,000 kg of fuel for the airline over the eight-month experimental period. These savings led to between 838,000-2.22 million kg of CO2 abated at a marginal abatement cost of negative $250 per ton of CO2 (i.e. a $250 savings per ton abated) 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.

JEL-codes: D01 J3 Q5 R4 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-ene, nep-env, nep-exp and nep-lma
Note: EEE PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Working Paper: A new approach to an age-old problem: solving externalities by incenting workers directly (2017)
Working Paper: A new approach to an age-old problem: solving externalities by incenting workers directly (2016)
Working Paper: A New Approach to an Age-Old Problem: Solving Externalities by Incenting Workers Directly (2016)
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