Research / BFI Working PaperJun 01, 2016

A New Approach to an Age-Old Problem: Solving Externalities by Incenting Workers Directly

Understanding motivations in the workplace remains of utmost import as economies around the world rely on increases in labor productivity to foster sustainable economic growth. This study makes use of a unique opportunity to “look under the hood” of an organization that critically relies on worker effort and performance. By partnering with Virgin Atlantic Airways on a field experiment that includes over 40,000 unique lights covering an eight-month period, we explore how information and incentives affect captains’ performance. Making use of more than 110,000 captain-level observations, we find that our set of treatments—which include performance information, personal targets, and prosocial incentives—induces captains to improve efficiency in all three key flight areas: pre-flight, in-flight, and post-flight. We estimate that our treatments saved between 266,000-704,000 kg of fuel for the airline over the eight-month experimental period. These savings led to between 838,000-2.22 million kg of CO2 abated at a marginal abatement cost of negative $250 per ton of CO2 (i.e. a $250 savings per ton abated) over the eight-month experimental period. Methodologically, our approach highlights the potential usefulness of moving beyond an experimental design that focuses on short-run substitution effects, and it also suggests a new way to combat firm-level externalities: target workers rather than the firm as a whole.

More Research From These Scholars

BFI Working Paper Sep 30, 2020

Reservation Wages and Workers’ Valuation of Job Flexibility: Evidence from a Natural Field Experiment

Kuan-Ming Chen, Claire Ding, John List, Magne Mogstad
Topics:  Employment & Wages
BFI Working Paper May 24, 2021

How Experiments with Children Inform Economics

John List, Ragan Petrie, Anya Samek
Topics:  Uncategorized
BFI Working Paper Dec 14, 2020

The Value of Time in the United States: Estimates from Nationwide Natural Field Experiments

Ariel Goldszmidt, John List, Robert D. Metcalfe, Ian Muir, V. Kerry Smith, Jenny Wang
Topics:  Uncategorized