A new approach to an age-old problem: solving externalities by incenting workers directly

Greer Gosnell, Robert Metcalfe () and John List

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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: J01 R14 (search for similar items in EconPapers)
Pages: 83 pages
Date: 2016-06-01
New Economics Papers: this item is included in nep-ene and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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http://eprints.lse.ac.uk/84331/ Open access version. (application/pdf)

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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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:84331

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