On Monday, October 21 2019, 14:00 - 15:30, Maryna Ivets (University of Duisburg-Essen) will present:
You Can Win by Losing! Incentivizing Motivation and Self-Control Preferences: Evidence from Weight Loss Program
In this paper we investigate self-control and motivation in connection to weight loss. We first develop a theoretical model and then test its conclusions with data from DietBet. The theoretical model, based on Gul & Pesendorfer (2001), studies a two-period decision problem of an agent who is tempted by inferior choices in period 2. A random and time-variant degree of motivation is introduced into the model to influence his perceived cost of self-control. An agent is faced with a given menu and has to exercise self-control. We introduce a commitment mechanism (a bet) that can help an agent commit to his normative choice in period 2. Theoretical results show that placing a bet on himself can help an agent to commit successfully, and also can explain why an agent with a preference for commitment can fail (behavior that is usually attributed to preference reversal). This commitment failure is associated with agent's overestimation of his future self-control's cost. We also distinguish between sophisticated and naive agents and show that placing higher wagers on themselves can help these agents commit. Our empirical results suggest that the bet mechanism encourages weight loss. More specifically, higher betting stakes are associated with greater weight loss. Overall, by placing higher wagers on themselves agents can avoid underinvestment in their future self-control and increase their chances for successful commitment.
Room: WST-C.02.12, Weststadttürme Berliner Platz 6-8, Essen
Abstract: This paper explores how labor market conditions drive gender differences in the human capital decisions of men and women, focusing on how their schooling decisions respond to an exogenous change in cognitive ability. Using data from Mexico, I begin by documenting that in utero exposure to air pollution leads to lower cognitive ability in adulthood for both men and women. I then explore how male and female schooling decisions respond differentially to this cognitive shock: for women only, pollution exposure leads to reduced educational attainment and income. I show that two labor market features are fully responsible for this gender difference: (1) women sort into white-collar occupations at higher rates, and (2) schooling and ability are more complementary in white-collar than blue-collar occupations.
Abstract: Understanding how health care utilization responds to cost-sharing incentives is of central importance for providing high quality care and limiting the growth of costs. While there is compelling evidence that patients react to financial incentives, it is less well understood how and why specific aspects of the design of contracts shape the size of this reaction. In this paper, we focus on the question whether the framing of cost-sharing incentives has an effect on health care utilization. To study this, we make use of a policy change that occurred in the Netherlands. Until 2007, patients received a no-claim refund if they consumed little or no health care; from 2008 onward there was a deductible instead. This means that very similar economic incentives were first framed in terms of smaller gains and later as losses. We use claims-level data for a broad sample from the Dutch population to estimate whether the reaction to economic incentives was affected by this. Our empirical approach is to exploit within-year variation using an instrumental variables approach while controlling for differences across years. Our central finding is that patients react to incentives much more strongly when they are framed in terms of losses. Simulations based on our estimates show that the effect on yearly spending is 8.6 percent. This suggests that discussions on the optimal design of cost-sharing incentives should not only involve coinsurance rates and cost-sharing limits, but also how these are presented to patients.