nep-nud New Economics Papers
on Nudge and Boosting
Issue of 2023‒06‒26
five papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. Behavioral economics in companies: Nudging green behavior. Evidence of the effectiveness of green nudges in companies By Enste, Dominik; Potthoff, Jennifer
  2. Behavioral Insights fostering Pay for Sustainability Remuneration Schemes By Julia M. Puaschunder
  3. Good or Bad News First? The Effect of Feedback Order on Motivation and Performance By Lavinia Kinne
  4. First Generation College Students and Peer Effects By Kofoed, Michael S.; Jones, Todd R.
  5. Free to Fail? Paternalistic Preferences in the United States By Björn Bartling; Alexander W. Cappelen; Henning Hermes; Marit Skivenes; Bertil Tungodden

  1. By: Enste, Dominik; Potthoff, Jennifer
    Abstract: Climate protection is one of the greatest challenges society and economy are currently facing. In addition to policy (Macro level) and individual consumers (Micro level) also companies (Meso level) are confronted with increasing pressure to act more ecologically sustainable. Besides ecological improvement in the production processes and value chains, corporate transformation to more ecological sustainability also demands a development towards the office model of the future, the "Green Office" which is realized by the triade of "green IT", "green building" and "green behavior". This requires employees who are willing to change and structures who enable change. In view of the fact that employees in offices are not yet financially incentivized to act ecologically sustainable in the work context the question arises as to whether behavioral-economic insights can be used to motivate employees towards more ecological choices in their work life. By an intelligent and effective use of green nudges employees can be supported by adopting climate-friendly choices with regard to the following fields of action: energy efficiency, sustainable mobility and resource use. Exemplary nudges are gamification elements such as team bicycle or energy-saving competitions, feedback on electricity or fuel consumption, carpool simplifications and default changes such as double-sided printing. If properly designed, green nudges can combine corporate climate protection, fun, team spirit and freedom of choice and can, for instance, achieve significant savings of 6.5 percent in electricity consumption. If all offices used in the top 7 cities (Cologne, Düsseldorf, Stuttgart, Frankfurt, Hamburg, Munich, Berlin) would save an average of 6.5 percent electricity through green nudges, assuming an annual electricity consumption of 70kWh per m2 office area, 419, 676 MWh, more than 176, 000 tons of CO2 and 167.87 million euros in electricity costs could be yearly saved in Germany.
    Keywords: environmental awareness, sustainability, nudging, company, Germany
    JEL: D22 D91 Q51
    Date: 2023
  2. By: Julia M. Puaschunder (Columbia University, Graduate School of Arts and Sciences, USA)
    Abstract: In the aftermath of the 2008/09 World Financial Recession as well as after the COVID-19 external economic shock fallout, the stakeholder interest in integrating social considerations in corporate and finance market endeavors has risen steadily. The looming climate change crisis has exacerbated the call for sustainability in economics, finance and professional governance and leadership. In the USA and Europe, Green New Deals are governmental projects to imbue sustainability practices in corporate and financial sector activities. In the area of capital market supervision in the USA, the Securities and Exchange Commission has proposed mandatory disclosures regarding climate change risks in the wake of attention to Environmental, Social and Governance. In Europe, the European Sustainable Finance Taxonomy classifies industry’s CO2 emission levels in order to use transparency to curb environmentally-harmful activities for the sake of sustainability. Financial Social Responsibility continues to grow in qualitative and quantitative terms, foremost in Socially Responsible Investment. The corporate sector has responded to all these sustainability trends with the concept of ‘Pay for Sustainability’ as an executive compensation form that either lowers variable pay if sustainability is not implemented or provides executive bonuses for pro-active sustainability integration into corporate activities. This paper addresses contributions of behavioral economics for improving the acceptance and efficiency of ‘Pay for Sustainability’ remuneration schemes in three features: 1. Socio-psychological aspects of remuneration that heighten social status and social belonging imbuing meaning and purpose to work; 2. Temporal bundling strategies that help decision makers envision now and the future at the same time, which helps aligning short-term with long-term goals of corporations; 3. Prospect Theory’s insights that losses emotionally loom larger than gains, which provides valuable communication nudges for outlining the intangible emotional value of sustainability care. Overall, this article discusses the current state of ‘Pay for Sustainability’ remuneration and highlights positive affirmation and communication nudges to work with social status-enhancing behavioral communication features that boost the positive acceptance of and reaction to ‘Pay for Sustainability.’
    Keywords: Corporate Social Responsibility, Behavioral Economics, Behavioral Insights, Board decision making, Economics, Environmental financialization, European Green Deal
    Date: 2023–03
  3. By: Lavinia Kinne
    Abstract: How to give feedback in learning environments is a widely discussed topic. I design a field experiment to understand whether the ordering of feedback elements matters for motivation and performance. In random order, university students get one positive and one negative feedback element on their performance in exam practice questions. Students who first receive positive feedback are more motivated to study for the exam compared to those receiving negative feedback first. This effect is driven by a drop in motivation after negative feedback when receiving it first, but not when receiving it second. Furthermore, students adjust their study content to the feedback topics. I find no significant effects of feedback ordering on exam performance overall, but students who first receive the positive feedback perform better if their negative-feedback topic is covered in the exam.
    Keywords: Education, feedback, motivation, performance
    JEL: D83 I20 I23
    Date: 2023
  4. By: Kofoed, Michael S. (U.S. Military Academy, West Point); Jones, Todd R. (Mississippi State University)
    Abstract: Higher education policymakers are concerned about the success of first-generation college students. In this study, we investigate one potential factor that may influence outcomes: first-generation students' peers. To mitigate common biases that may arise when estimating peer effects, we leverage the assignment of roommates at The United States Military Academy (West Point). We do not find evidence that being exposed to a roommate(s) with a one standard deviation higher English SAT score impacts first-semester English grades for first-generation students. Our findings for math are inconclusive, with at best suggestive evidence of a small, positive effect.
    Keywords: peer effects, roommates, first generation college students
    JEL: I21 I26 H41
    Date: 2023–05
  5. By: Björn Bartling; Alexander W. Cappelen; Henning Hermes; Marit Skivenes; Bertil Tungodden
    Abstract: We study paternalistic preferences in two large-scale experiments with participants from the general population in the United States. Spectators decide whether to intervene to prevent a stakeholder, who is mistaken about the choice set, from making a choice that is not aligned with the stakeholders’ own preferences. We find causal evidence for the nature of the intervention being of great importance for the spectators’ willingness to intervene. Only a minority of the spectators implement a hard intervention that removes the stakeholder’s freedom to choose, while a large majority implement a soft intervention that provides information without restricting the choice set. This finding holds regardless of the stakeholder’s responsibility for being mistaken about the choice set – whether the source of mistake is internal or external – and in different subgroups of the population. We introduce a theoretical framework with two paternalistic types – libertarian paternalists and welfarists – and show that the two types can account for most of the spectator behavior. We estimate that about half of the spectators are welfarists and that about a third are libertarian paternalists. Our results shed light on attitudes toward paternalistic policies and the broad support for soft interventions.
    Keywords: paternalism, libertarian paternalism, welfarism, freedom to choose
    JEL: C91 C93 D69 D91
    Date: 2023

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