Can financial incentives help heavy drinkers stay sober?

Rational (and quasi-rational) decision-makers respond to incentives. If the costs of doing something go up, they tend to do less of it. If the costs go down, they tend to do more. And the reverse is true of benefits. Changing the costs and/or benefits of an activity therefore should be expected to change behaviour.

Does that logic extend as far as behaviours involving addiction and self-control problems? Consider alcohol consumption. Can heavy drinkers be incentivised to remain sober, at least temporarily, by increasing the costs of drinking, or increasing the benefits of not drinking? That is essentially the question addressed in this 2019 article by Frank Schilbach (MIT), published in the prestigious journal American Economic Review (open access).

Schilbach conducted a field experiment over three weeks with 229 cycle-rickshaw drivers in Chennai, India. In the experiment, the drivers were randomly split into three groups. The first group received a financial incentive to remain sober (the 'Incentive group'). The second group were paid an unconditional payment of similar magnitude (the 'Control group'). The third group got to choose between the sobriety incentives and the unconditional payment (the 'Choice group'). To receive their payment, the study participants had to report to the study office and submit to a breathalyser test. Schilbach was really interested in the effect of alcohol consumption on savings behaviour, so each research participant was offered the opportunity to save money at the study office each day. He was also interested in the effects on labour market participation and earnings, which were determined using surveys of the research participants.

The results reveal a number of important things about rational behaviour among heavy drinkers. First, the group that was given the choice between sobriety incentives and an unconditional payment demonstrated a strong demand for sobriety:

One-third to one-half of study participants chose sobriety incentives over unconditional payments, even when this choice entailed a potential or certain reduction in study payments...

One-third of the participants in the 'choice group' were willing to give up as much as 30 percent of their study earnings in order to be given the sobriety incentives. Schilbach isn't able to definitively determine why there was such high demand for sobriety, but he does note that:

First, study participants had significant experience with alcohol consumption and the potentially resulting self-control problems. The average study participant had been drinking alcohol for over a decade and many of them had been drinking (almost) daily...

Second, individuals perceived the costs associated with their drinking as significant. Many individuals expressed a strong desire to reduce their drinking in surveys and informal conversations. These men had spent substantial income shares on daily alcohol consumption for many years before participating in the study. Compared to these expenses, the forgone study payments due to the commitment choices may have appeared relatively small to individuals, especially if they implied a positive (perceived) chance of reducing subsequent alcohol consumption in the longer run.

So, the research participants may have perceived the experimental setting, and the money on offer, as a way to commit themselves to sobriety, at least for the period of the study. Did the incentives work, though? Schilbach finds that they did:

In the pre-incentive period, about one-half of the individuals in each of the three groups visited the study office sober. This fraction gradually declined in the Control Group to about 35 percent by the end of the study... In contrast, with the start of the incentivized period, sobriety in the Incentive and Choice Groups increased by about 10 to 15 percentage points. Subsequent sobriety at the study office also declined in these two groups, but the difference to the Control Group remained roughly constant.

Regression models confirm that the Incentive and Choice groups were approximately 13 percentage points more likely to visit the study office sober than the Control group, and the average breath alcohol content (BAC) was 2 to 3 percent lower for the Incentive and Choice groups than for the Control group (conditional on visiting the study office). Schilbach notes that the effect was largest on daytime drinking and not overall alcohol consumption, suggesting that many study participants simply shifted their drinking to later in the day (after visiting the study office).

Did sobriety affect labour market outcomes? Schilbach finds small and statistically insignificant effects on labour supply, hours worked, and earnings. As for savings, Schilbach found that the intervention increased savings, with the Incentive and Choice groups saving about 50 percent more than the Control group over the study period. Schilbach interprets this as showing that:

...increasing sobriety reduced self-control problems in savings decisions. An alternative interpretation could be that alcohol is a key temptation good for this population such that reducing alcohol consumption mitigates the need for commitment savings. However, given that the intervention only moderately reduced overall alcohol consumption and expenditures, this channel is unlikely.

My takeaway from this paper is that many heavy drinkers recognised their own self-control problems and were willing to give up some income for a commitment device that would help them remain sober. The commitment device increased the costs of drinking (or, equivalently, increased the benefits of not drinking). So, the drinkers who chose the sobriety incentives were acting rationally in response to a change in incentives. The research participants who shifted their drinking to later in the day were also acting quite rationally. By shifting their drinking to later in the day, they could receive the benefits of the sobriety incentive, while continuing to drink (albeit later in the day). In other words, the incentive changed behaviour, just not necessarily in the way it was intended to.

So, if you wanted to roll out a broader intervention based on changing incentives for heavy drinking, it might be better to measure sobriety at multiple times of the day. However, in this context even the later drinking may have reduced some of the potential alcohol-related harm, since there may have been fewer drunk-driving cycle-rickshaw drivers on the streets of Chennai (although, to be fair, the study doesn't actually show that there was less drink-driving).

It would be interesting to know how much of these study results are context-dependent, and whether a similar intervention would work elsewhere. If you tried to incentivise heavy drinkers in a high-income country to reduce their consumption, would they respond in a similar way? That question will have to wait for future research.

Could student-run social media groups reduce university student dropout?

Universities are quite focused on student retention, and as I noted in this 2018 post, if we can identify at-risk students, perhaps we can help to find ways to ensure they succeed. However, around that time I had a summer research scholarship student looking into the reasons that students drop out, and it turned out that each student dropped out for quite different, and difficult to predict, reasons. I call this the Anna Karenina principle of dropout: 'all students who persist are alike; each student who drops out does so in their own way'.

What if there were a simpler way of reducing student dropout, that did not require universities to identify at-risk students in advance, but instead reduced the risk of dropout from the outset? That would seem to be an attractive proposition.

So, I was interested to read this 2021 article by Lucio Masserini (University of Pisa) and Matilde Bini (European University of Rome), published in the journal Socio-Economic Planning Sciences (ungated version here), which evaluates the impact of student-created social media groups, such as Facebook pages, on student dropout. Masserini and Bini use survey data from 1879 first-year students from a major university in Central Italy.

Why would joining social media groups reduce dropout? Masserini and Bini suggest that these groups may help students form social connections and feel greater 'belonging' within the university community, while also providing a way for students to share information about courses, assessments, and study materials.

The key challenge in the analysis is that students are not randomly assigned to join social media groups - they choose whether or not to do so. And students who join these groups may differ from those who don't in ways that would bias a simple comparison of the students who joined social media groups and those who didn't. For example, more engaged students, who are less likely to drop out, might also be more inclined to join university-related social media groups run by other students. Masserini and Bini deal with this using propensity score matching - which involves identifying 'control' students who didn't join a social media group but who are most similar to each 'treated' student who did join a social media group. Then, comparing their matched control and treated students deals with any observable differences between the students who did, and did not, join social media groups.

Masserini and Bini then report a range of results of the estimated impact of social media groups on dropout, based on different assumptions used to do the matching, and:

...with the exception of k=1 nearest-neighbour, all the estimates indicated that students joining groups or Facebook pages had, on average, a lower probability to dropout, compared with those who were not part of such groups. The results also showed that the extent of the difference between the treated and control groups was not negligible, as it varied from 0.081 to 0.113, depending on the matching algorithm.

So, the results suggest that joining student-run social media groups or Facebook pages reduces the probability of a student dropping out by between 8.1 and 11.3 percentage points. Now, I should note that I don't in general find propensity score matching to be terribly convincing as a way of dealing with selection bias. 

Now, I should note that I do not find propensity-score matching entirely convincing as a way of dealing with selection bias. Although matching can make the treatment and control groups similar on observed characteristics, there is still something that is different about the treated and control students that leads the treated students to choose to join social media groups and the control students to choose not to join. That something is an omitted variable in the propensity score matching approach, and it is unclear how big the omitted variable bias will be. If, for example, joiners are more motivated or feel more connected to university life, then some of the apparent effect of joining the group on the probability of dropping out may instead reflect those underlying differences. Masserini and Bini's results are robust across several matching methods and sensitivity checks, which is reassuring, but robustness checks cannot establish that there isn't some omitted variable bias in the matching.

Having said that, if we take these results at face value, then there may be some merit in having student-run social media groups that university students can join. We must bear in mind that these results come from a survey in 2016, and they may not have aged well. But social media groups still exist, and students still participate in them. It could be worth exploring whether these effects still hold, given that increasing student retention remains a key focus for universities.

Having said that, student-run social media groups would probably be a relatively inexpensive way for universities to reduce dropout. Now, these results come from students surveyed in 2016, and both social-media use and the university environment have changed considerably since then. Nevertheless, the basic idea remains plausible. Universities could support the creation of student-run groups and randomly encourage or 'nudge' some students to join, then compare their subsequent retention with that of students who were not encouraged. That experimental approach would provide more contemporary and causal evidence of whether the groups reduce dropout, rather than merely attracting students who were already less likely to drop out.

Read more:

• Predicting student success, and failure
• Big data, student dropouts, and failing fast

Egg prices will rise in New Zealand, even without a major avian flu outbreak

Last year, I posted about avian flu in the US and the impact on egg prices, noting that prices will rise. Thankfully there hasn't been a major outbreak of avian flu in New Zealand as yet, although it seems likely there will be soon. Domestic birds, such as chickens, are at risk, and as I noted in that earlier post, that affects the supply of eggs. And New Zealand egg suppliers are acting now, as the New Zealand Herald reported earlier this week:

It comes as New Zealand’s largest egg supplier Mainland Poultry, accounting for nearly 40% of the country’s eggs, is putting hundreds of thousands of free-range chickens into lockdown after the deadly bird flu virus was detected in the country last week.

Putting free-range chickens into lockdown will raise the costs of production for free-range eggs. The effect on the market for free-range eggs is shown in the diagram below. Before the chickens were locked down, the free-range egg market was in equilibrium, where demand D0 meets supply S0, with a price of P0 and a quantity of free-range eggs traded of Q0. The lockdown increases the costs of producing free-range eggs, which decreases supply to S1. This increases the equilibrium price of free-range eggs to P1, and reduces the quantity of free-range eggs traded to Q1.

Free-range eggs and colony eggs are substitutes. Once free-range eggs become relatively more expensive, some consumers will switch to colony eggs. The effect on the colony eggs market is shown in the diagram below. Before the change in the price of free-range eggs, the market for colony eggs was in equilibrium, where demand DA meets supply SA. The equilibrium price was PA, and the quantity of colony eggs traded was QA. Since some consumers switch to the relatively cheaper colony eggs, that increases the demand for colony eggs from DA to DB, increasing the equilibrium price of colony eggs from PA to PB, and increasing the quantity of colony eggs traded from QA to QB.

Overall, eggs are going to cost more, regardless of whether they are free-range eggs or colony eggs. And even without a major outbreak of avian flu. If avian flu does take hold in New Zealand, the price of eggs of both varieties will go up even further.

This week in research #136

Here's what caught my eye in research over the past week:

• Baker et al. (with ungated earlier version here) find that following legalisation, sports betting does not displace other gambling or consumption but significantly reduces savings, as risky bets crowd out positive expected value investments, and that these effects are concentrated among frequent bettors and low-savings households
• Alfani (open access) summarises the state of research on social mobility and income inequality in preindustrial societies, and identifies several promising avenues for new research
• Bostwick and Nguyen (with ungated earlier version here) find that when a student enrols in a triweekly (rather than biweekly) university class, they earn lower grades and are less likely to take a subsequent course in that same field
• Kaffine and Rao (with ungated earlier version here) find that the observed distribution of satellite orbits is well explained by profit-maximising satellite operator behaviour, and that collision risk plays a key deterrent role
• Yang et al. (open access) find that having daughters slightly increases the preference for gender equality and homosexual rights, using data across 39 countries from the European Social Survey
• Di Tella, Gàlvez, and Schargrodsky (with ungated earlier version here) find, using a laboratory experiment, that two strategies often proposed to reduce political polarisation on social media, removing access to the platform and exposing users to counter-attitudinal content, do not reduce polarisation and may instead produce mild increases
• Perroni et al. (open access) find, using a sample of 40,000 job vacancies in Vietnam, that physically attractive women are offered higher salaries, whereas physically attractive men are not
• Sentana and Gómez-Bengoechea comparing the behaviour of a groups of professional soccer players and inexperienced college students when they play the same two-person zero-sum game in both a soccer stadium (the field) and a video game (the lab), and find that while both groups behave consistently with the implications of mixed strategy equilibrium in the field, their behaviour rejects the theory in the lab