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

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Christensen, Peter

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TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w31322.Publication details: Cambridge, Mass. National Bureau of Economic Research 2023.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: 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.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w31322 (Browse shelf(Opens below))	Not For Loan

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June 2023.

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.