Policy Applications of Psychology and Economics Professor Sendhil Mullainathan Fall 2006

Question It may come as a surprise but... Some students (not you) often do their writing assignments at the last minute What can you do to prevent that?

First question you should ask Should you do anything at all? Must first understand why people do what they do

Why last minute crunch? Rational model: People make decisions that are best for them –Policy suggestion: Do nothing Psychology: –Procrastination. Thought experiment: If I ask you when you will start a 5 page memo for this course that is due two weeks from today, what would you say? Does this contradict with the economic model above? –Mis-estimation of time needed: Example experiment: 37 students asked how long will it take to finish senior thesis. 34 days estimate. 55 actual. So starting too late can hurt in quality

Policy Interventions With those two in mind, what interventions could you do in principle? –Inform students Why might that work or not? Haven’t you already lived through this mistake countless years –Bind yourself to starting early Break long projects into parts. Forced to turn in constituent parts.

Example experiment Ariely-Wertenbroch Subjects asked to proof read 3 artificially generated texts –10 pages, 100 grammatical and spelling errors –Sexual identity is intrinsically impossible,” says Foucalt; however, according to de Selby[1], it is not so much sexual identity that is intrinsically impossible, but rather the dialectic, and some would say the satsis, of sexual identity. Thus, D’Erlette[2] holds that we have to choose between premodern dialectic theory and subcultural feminism imputing he role of the observor as poet.”

Setup Contingent payment –10 cents per correctly detected error and $1 penalty for each day of delay Conditions: –Evenly spaced deadlines One of three texts every 7 days –End-deadline condition Submit all three texts at the end of 3 weeks –Self-imposed deadline condition Which condition do you think did best? What condition would economics say should do best?

Results $20 in evenly spaced (140 errors, 4 delays) $14 in self imposed (110 errors, 8 delays) What do you make of $14 < $20? $4.50 in end deadline (70 errors, 13 errors) What do you make of $4.50 < $14 and $20

Deadlines Why do the deadlines work? –How could you modify the experiment to test your hypotheses? What might be some drawbacks? "I love deadlines. I like the whooshing sound they make as they fly by.“ Douglas Adams –Late fees for credit card companies.

What this Course is About Example provides a small illustration of what this course is about. –(Though we’ll focus on more important policy problems!) Policy debates dominated by economic reasoning –Teach that reasoning in several contexts Economics is often at odds with psychology about how people behave –Teach you the lab evidence from psychology Understand how to integrate these two to craft interesting, novel policies Along the way, teach you how to analyze data, both experimental and empirical

Topics Covered Discrimination Crime.. See syllabus

Course Requirements Three memos –Each memo should describe an idea for an empirical project that you can implement –Much better to think small and doable than big –Describe in detail a question and the data you’d collect (or use) to answer it. –Describe the drawbacks/confounds –Can range in size but three to 5 pages is common Midterm (November 6) Final Paper (due December 18)

Interesting memos Experiment on recycling –Information or automatic behavior? –Field experiment Does race/gender of waiter affect tips? –Observational study at Sonic

Readings Course packet and Influence by Cialdini First readings on the web I understand procrastination! Essential to the course Please do the readings before each class Will not go into the studies in detail but will expect you instead to ask me questions Harder to read after lectures than before

Other administrative details Office hours times Wed –Sign up sheet will be outside my door. Please sign up ahead of time Deadlines are inflexible –Both before and after the fact