Lecture 5: Time Preferences (Applications) I

TL;DR

A study conducted on data entry workers in India found that offering commitment devices, such as deadlines and target-based contracts, increased productivity by 2.3%.

Transcript

[SQUEAKING] [RUSTLING] [CLICKING] FRANK SCHILBACH: So I'm going to briefly recap what we discussed, and then sort of talk about a number of different applications, ranging from, like, work, exercising, credit cards, savings behavior, drinking, smoking, fertilizer use, and so on. And then, that'll spill into the next lecture, or go into next lecture... Read More

Key Insights

• 🤳 Workers showed a demand for commitment devices, indicating some form of self-control issues.
• 🧑‍⚕️ Offering commitment devices, such as deadlines and target-based contracts, increased productivity among data entry workers.
• 🧑‍⚕️ Different types of workers exhibit varying preferences for commitment devices, with some workers preferring flexibility and others setting unrealistic deadlines.
• 🪡 Commitment devices can be effective in improving productivity but should be customized to individual needs and constraints.

Questions & Answers

Q: What are some examples of commitment devices used in the study?

In the study, commitment devices included evenly-spaced deadlines and target-based contracts. Workers could choose to set deadlines for their work or aim to meet specific targets to enhance their productivity.

Q: Why do some workers overcommit themselves in setting deadlines?

Some workers may overestimate their ability to meet deadlines or underestimate the difficulty of the work. They may be optimistic about their future performance and set unrealistic deadlines for themselves.

Q: How do commitment devices improve productivity?

Commitment devices help workers overcome self-control problems by creating a commitment or penalty for not meeting deadlines. They make it costlier for workers to postpone their work or lower their productivity, thereby increasing motivation and focus.

Q: What are some factors that affect the effectiveness of commitment devices?

The effectiveness of commitment devices can be influenced by factors like the worker's understanding of their future behavior, the strength of the commitment device, and the presence of other temptations or distractions that might lead to lower productivity.

Summary & Key Takeaways

• The study focused on data entry workers in India who were given the option to choose their own deadlines or set specific targets for their work.

• The results showed that workers who were offered commitment devices, such as evenly-spaced deadlines or target-based contracts, had higher productivity compared to those who were not given any commitments.

• The study also found that some workers preferred flexibility and did not choose any commitments, while others overcommitted themselves, setting unrealistic deadlines for their work.