Optimally generate policy-based evidence before scaling.

Social scientists have increasingly turned to the experimental method to understand human behaviour. One critical issue that makes solving social problems difficult is scaling up the idea from a small group to a larger group in more diverse situations. The urgency of scaling policies impacts us every day, whether it is protecting the health and safety of a community or enhancing the opportunities of future generations. Yet, a common result is that, when we scale up ideas, most experience a 'voltage drop'-that is, on scaling, the cost-benefit profile depreciates considerably. Here I argue that, to reduce voltage drops, we must optimally generate policy-based evidence. Optimality requires answering two crucial questions: what information should be generated and in what sequence. The economics underlying the science of scaling provides insights into these questions, which are in some cases at odds with conventional approaches. For example, there are important situations in which I advocate flipping the traditional social science research model to an approach that, from the beginning, produces the type of policy-based evidence that the science of scaling demands. To do so, I propose augmenting efficacy trials by including relevant tests of scale in the original discovery process, which forces the scientist to naturally start with a recognition of the big picture: what information do I need to have scaling confidence?

Shifting parental beliefs about child development to foster parental investments and improve school readiness outcomes.

Socioeconomic gaps in child development open up early, with associated disparities in parental investments in children. Understanding the drivers of these disparities is key to designing effective policies. We first show that parental beliefs about the impact of early parental investments differ across socioeconomic status (SES), with parents of higher SES being more likely to believe that parental investments impact child development. We then use two randomized controlled trials to explore the mutability of such beliefs and their link to parental investments and child development, our three primary outcomes. In the first trial (NCT02812017 on clinicaltrials.gov), parents in the treatment group were asked to watch a short educational video during four well-child visits with their pediatrician while in the second trial (NCT03076268), parents in the treatment group received twelve home visits with feedback based on their daily interactions with their child. In both cases, we find that parental beliefs about child development are malleable. The first program changes parental beliefs but fails to lastingly increase parental investments and child outcomes. By contrast, in the more intensive program, all pre-specified endpoints are improved: the augmented beliefs are associated with enriched parent-child interactions and higher vocabulary, math, and social-emotional skills for the children.

An experimental test of fundraising appeals targeting donor and recipient benefits.

We partnered with Alaska's Pick.Click.Give. programme to implement a statewide natural field experiment with 540,000 Alaskans designed to examine two of the main motivations for charitable giving: concerns for the benefits to self (impure altruism or 'warm glow') or concerns for the benefits to others (pure altruism). Our empirical results highlight the relative importance of appeals to self: individuals who received such an appeal were 6.6% more likely to give and gave 23% more than counterparts in the control group. Yet, a message that instead appealed to recipient benefits (motivated by altruism) had no statistically significant effect on average donations relative to the control group. We also find evidence of long-run effects of warm-glow appeals in the subsequent year. Our results have import for theoreticians and empiricists interested in modelling charitable giving as well as practitioners and policymakers.

Trading experience modulates anterior insula to reduce the endowment effect.

People often demand a greater price when selling goods that they own than they would pay to purchase the same goods-a well-known economic bias called the endowment effect. The endowment effect has been found to be muted among experienced traders, but little is known about how trading experience reduces the endowment effect. We show that when selling, experienced traders exhibit lower right anterior insula activity, but no differences in nucleus accumbens or orbitofrontal activation, compared with inexperienced traders. Furthermore, insula activation mediates the effect of experience on the endowment effect. Similar results are obtained for inexperienced traders who are incentivized to gain trading experience. This finding indicates that frequent trading likely mitigates the endowment effect indirectly by modifying negative affective responses in the context of selling.

Quantity discounts on a virtual good: The results of a massive pricing experiment at King Digital Entertainment.

We report on a natural field experiment on quantity discounts involving more than 14 million consumers. Implementing price reductions ranging from 9-70% for large purchases, we found remarkably little impact on revenue, either positively or negatively. There was virtually no increase in the quantity of customers making a purchase; all the observed changes occurred for customers who already were buyers. We found evidence that infrequent purchasers are more responsive to discounts than frequent purchasers. There was some evidence of habit formation when prices returned to pre-experiment levels. There also was some evidence that consumers contemplating small purchases are discouraged by the presence of extreme quantity discounts for large purchases.

The behavioralist as nutritionist: leveraging behavioral economics to improve child food choice and consumption.

We leverage behavioral economics to explore new approaches to tackling child food choice and consumption. Using a field experiment with >1500 children, we report several key insights. We find that incentives have large influences: in the control, 17% of children prefer the healthy snack, whereas introduction of small incentives increases take-up of the healthy snack to ∼75%. There is some evidence that the effects continue post-treatment, consistent with a model of habit formation. We find little evidence that the framing of incentives (loss vs. gain) matters. Educational messaging alone has little effect, but we observe a combined effect of messaging and incentives: together they provide an important influence on food choice.

Consumers' misunderstanding of health insurance.

We report results from two surveys of representative samples of Americans with private health insurance. The first examines how well Americans understand, and believe they understand, traditional health insurance coverage. The second examines whether those insured under a simplified all-copay insurance plan will be more likely to engage in cost-reducing behaviors relative to those insured under a traditional plan with deductibles and coinsurance, and measures consumer preferences between the two plans. The surveys provide strong evidence that consumers do not understand traditional plans and would better understand a simplified plan, but weaker evidence that a simplified plan would have strong appeal to consumers or change their healthcare choices.

Testing for altruism and social pressure in charitable giving.

Every year, 90% of Americans give money to charities. Is such generosity necessarily welfare enhancing for the giver? We present a theoretical framework that distinguishes two types of motivation: individuals like to give, for example, due to altruism or warm glow, and individuals would rather not give but dislike saying no, for example, due to social pressure. We design a door-to-door fund-raiser in which some households are informed about the exact time of solicitation with a flyer on their doorknobs. Thus, they can seek or avoid the fund-raiser. We find that the flyer reduces the share of households opening the door by 9% to 25% and, if the flyer allows checking a Do Not Disturb box, reduces giving by 28% to 42%. The latter decrease is concentrated among donations smaller than $10. These findings suggest that social pressure is an important determinant of door-to-door giving. Combining data from this and a complementary field experiment, we structurally estimate the model. The estimated social pressure cost of saying no to a solicitor is $3.80 for an in-state charity and $1.40 for an out-of-state charity. Our welfare calculations suggest that our door-to-door fund-raising campaigns on average lower the utility of the potential donors.

A simple test of expected utility theory using professional traders.

We compare behavior across students and professional traders from the Chicago Board of Trade in a classic Allais paradox experiment. Our experiment tests whether independence, a necessary condition in expected utility theory, is systematically violated. We find that both students and professionals exhibit some behavior consistent with the Allais paradox, but the data pattern does suggest that the trader population falls prey to the Allais paradox less frequently than the student population.

Cigarette demand: a meta-analysis of elasticities.

Estimating elasticities of cigarette demand has become commonplace amongst economists and policymakers. Synthesizing the various elasticities into a coherent message is quite challenging, however, as the point estimates are obtained using quite disparate modeling techniques and data. In this study, we perform a meta-analysis to explore factors that influence variations within and across studies. Empirical results suggest that demand specification, data issues, and estimation methodology have varying degrees of influence on reported estimates of price, income, and advertising elasticities.

Testing neoclassical competitive market theory in the field.

This study presents results from a pilot field experiment that tests predictions of competitive market theory. A major advantage of this particular field experimental design is that my laboratory is the marketplace: subjects are engaged in buying, selling, and trading activities whether I run an exchange experiment or am a passive observer. In this sense, I am gathering data in a natural environment while still maintaining the necessary control to execute a clean comparison between treatments. The main results of the study fall into two categories. First, the competitive model predicts reasonably well in some market treatments: the expected price and quantity levels are approximated in many market rounds. Second, the data suggest that market composition is important: buyer and seller experience levels impact not only the distribution of rents but also the overall level of rents captured. An unexpected result in this regard is that average market efficiency is lowest in markets that match experienced buyers and experienced sellers and highest when experienced buyers engage in bargaining with inexperienced sellers. Together, these results suggest that both market experience and market composition play an important role in the equilibrium discovery process.