Incentive design for disease management: The role of time preferences (Job Market Paper, with Shilpa Aggarwal and Rebecca Dizon-Ross)
Abstract: Diabetes has reached epidemic levels in India. A promising strategy to reduce the burdens of diabetes is to encourage lifestyle modification by offering rewards for healthy behaviors, such as walking. However, it is not well understood how to optimally design incentives for ongoing behavior change, especially if agents are present-biased. We identify two aspects of the incentive design the frequency of incentive delivery and the dynamic complementarity of the incentive amount in behavior over time which theoretically interact with time preferences, and may improve incentive performance overall. We test the overall effectiveness of these design features, as well as their interaction with time preferences, in a sample of more than 2,000 adults with or at risk for diabetes in urban Tamil Nadu, India. We find that a three month incentive program offering 20 INR mobile recharges for completing 10,000 daily steps increases walking by an average of 1,300 steps per day. On average, weekly incentive delivery is more effective than daily or monthly delivery, and contracts with and without dynamic thresholds are equally effective. We further find that high-frequency incentive delivery performs relatively better for those who are impatient in the reward domain. We do not find any interaction between receiving a contract with a dynamic complementarity and impatience in either the reward or walking domain.
Research in Progress
Encouraging Abstinence Behavior in an Opioid Epidemic: Inentivizing Inputs and Outcomes (with Rebecca Dizon-Ross)
Abstract: Combatting the rise of the opioid epidemic is a central challenge of U.S. health care policy. A promising approach for improving welfare and decreasing medical costs of people with substance abuse disorders is offering incentive payments for healthy behaviors. This approach, broadly known as “contingency management” in the medical literature, has repeatedly shown to be effective in treating substance abuse. However, the use of incentives by treatment facilities remains extremely low. Furthermore, it is not well understood how to design optimal incentives to treat opioid abuse. This project will conduct a randomized evaluation of two incentive schemes for people with opioid use disorders, one incentivizing “inputs” to abstinence, and one incentivizing the “outcome” of abstinence. Both schemes are implemented with a novel “turnkey” mobile application, making them uniquely low-cost, low-hassle, and scalable. Effects will be measured on abstinence outcomes, including longest duration of abstinence and the percentage of negative drug tests, and the persistence of the effects will be assessed. In combination with survey data, variation from the experiment will shed light on the barriers to abstinence more broadly and inform our understanding of optimal incentive design. A pilot is currently under development.
Conservation Payments versus Technology Subsidies: Policy Design for Resource Efficiency in Irrigation (with Nick Hagerty)
Abstract: Policymakers seeking to correct environmental externalities often face a choice of two policy instruments: Pigouvian resource prices and subsidies for resource-efficient technologies. Prices are sufficient if the externality is the only market failure, but technology subsidies can raise social welfare in the presence of other market failures or behavioral biases. We evaluate these two policy instruments applied to water and energy conservation in irrigation through a randomized trial among farmers in a water-scarce region of Gujarat, India. Our design cross randomizes (a) payments for reduced water consumption with (b) subsidies for micro-irrigation technology. We will compare the cost-effectiveness of these two policies, measure investment inefficiencies in adoption of micro-irrigation, and calculate optimal irrigation policy. This project will provide the first experimental evidence on groundwater pricing and among the first on conservation payments.
Peer-Conditional Contracts for Common-Pool Resource Conservation: The Case of Gujarat's Groundwater (with Nick Hagerty)
Abstract: We test the ability of a novel contract to facilitate collective action in the setting of farm-level groundwater conservation. Our contract commits an individual farmer to invest in groundwater conservation only if a certain number of his neighbors also purchase the contract, thereby converting a standard public goods game to a threshold public goods game. Using a randomized trial among farmers in a water-scarce region of Gujarat, we test whether this contract can increase adoption rates by linking the benefits of neighbors’ conservation investments to a farmer’s own investment decision.
Optimal Defaults: `Choices' Over Electricity Prices in Cape Town
Abstract: It has been well documented that, when faced with a menu of contracts, individuals tend to be biased to selecting the default. This “default effect” has led to speculation over how policymakers should take defaults into account when designing a choice environment. A key difficulty in identifying the optimal default is that in the presence of default effects, plan choice cannot be used to identify underlying preferences. I examine optimal plan defaults in the regulated municipal electricity market in Cape Town, South Africa. I use responses to plausibly exogenous price changes to derive underlying preference parameters in the context of a two-stage choice model over electricity plans and consumption, allowing me to credibly identify the optimal default plan in the presence of behavioral responses to both prices and defaults.