Friday, February 14, 2014

Book Club -- The Why Axis – how economic incentives work in the real world

In the latest addition to the CT Health Policy Project Book Club -- They Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life – the authors believe that findings from economic experiments conducted in labs with undergraduates playing symbolic games do not translate into actionable lessons for the real world. Gneezy and List describe their messy, labor intensive but far more accurate real world experiments complete with control groups and direct outcome measures. They’ve looked at whether paying students, parents and/or teachers for better performance works (it does), paying employees for healthy behaviors saves on health costs (it does), how to reduce discrimination in markets (tell them you are getting more estimates), does a nutrition education program get kids to choose healthier foods (it doesn’t, but prizes work), and how to structure incentives and choices to maximize impact. A fascinating book that ends with a strong call to include experiments in any endeavor. Too many policies are set based on intuition or extrapolation from another setting, and we end up scratching our heads later not sure if it worked, or wondering why it didn’t. A good way to spend a snow day.