Incentive Pay and Social Returns to Worker Effort in Public Programs: Evidence from the Weatherization Assistance Program / Peter Christensen, Paul Francisco, Erica Myers.

Format:

Book

Author/Creator:

Christensen, Peter.

Contributor:

National Bureau of Economic Research.

Francisco, Paul.

Myers, Erica.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31322.

NBER working paper series no. w31322

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

Aligning compensation with recipient outcomes has the potential to improve the efficiency of government programs. We perform a field experiment to evaluate the impact of performance bonuses on the returns to spending in a large low-income energy efficiency assistance program. We find that performance-based bonuses dramatically increased program natural gas savings by 24%. The bonuses generate $5.39-$14.53 in social benefits for every dollar invested and increase the social net benefits from home-level weatherization more than two-fold. Contractors performing at high quality at baseline respond disproportionately to the incentives, suggesting that gains in the program's cost-effectiveness result from more efficient allocation of worker effort across workers who differ in their marginal effort cost. We do not find evidence of learning within the two-year study period or of increased deficiencies among non-incentivized tasks.

Notes:

Print version record

June 2023.