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Math The Almighty Buck Science

Leaving Money on the Table (nber.org) 42

Posted by msmash from the identifying-motivation dept.
Abstract of a paper on NBER: There is much disagreement about the extent to which financial incentives motivate study participants. We elicit preferences for being paid for completing a survey, including a one-in-twenty chance of winning a $100 electronic gift card, a guaranteed electronic gift card with the same expected value, and an option to refuse payment. More than twice as many participants chose the lottery as chose the guaranteed payment. Given that most people are risk averse, this pattern suggests that factors beyond risk preferences -- such as hassle costs -- influenced their decision-making. Almost 20 percent of participants actively refused payment, demonstrating low monetary motivation. We find both systematic and unobserved heterogeneity in the characteristics of who turned down payment. The propensity to refuse payment is more than four times as large among individuals 50 and older compared to younger individuals, suggesting a tradeoff between financially motivating participants and obtaining a representative sample. Overall, our results suggest that modest electronic gift card payments violate key requirements of Vernon Smith's induced value theory.

Leaving Money on the Table More | Reply

Leaving Money on the Table

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  • More than twice as many participants chose the lottery as chose the guaranteed payment.

    Everyone wants to be seen as a “winner”, and will do a LOT in order to convey that.

    The Instagram Generation doesn’t put in all that effort to bullshit the audience because society likes to see losers. Society doesn’t even want to acknowledge reality in social media anymore. Effort that comes with a reward is worth the effort to those who have shelves full of participation throphies.

    • The idea that humans are risk averse is wrong. Yes, if they lose, that is emotionally painful and they take that into consideration.

      But humans also love gambling. "Risk averse" is just one part of the story.

      • The idea that humans are risk averse is wrong. Yes, if they lose, that is emotionally painful and they take that into consideration. But humans also love gambling. "Risk averse" is just one part of the story.

        Some smart people did an experiment and assessment a few years back to see why some people become gambling addicts, and others don't.

        It turns out that almost winning gives addicts the same endorphin rush as winning does. Whereas with people such as myself, almost winning is worse than losing. So I've never been much for gambling beyond penny ante poker, which is more about sitting around with friends, and chatting while playing cards.

    • The dollar amount matters.

      If you're given a choice of $2 vs a 1-in-100 chance of $100 (and attendant 99-in-100 chance of $0), you take lottery. Sure, it's half the expected value, but $2 is so close to $0 that it has negligible impact. Assuming you did the work before being given a choice, you may as well go for the chance at real money rather than the guaranteed pitance. Also, since there's no real risk, there's no risk avoidance.

      Also, the more financially-secure (read: older) the less the pitance means.

      • Re: (Score:2)

        by Falos ( 2905315 )

        If the results are instantly deposited to my bank with no further action required I'll take the $2. The take-away I see is people don't have unlimited time and effort for the noise that gets offloaded onto plebs.

        I'm not getting out of bed for a $5 gift card that only redeems through some phone app and/or requires creating an account.

        Myself, I wouldn't bother with a $50 gift card that only redeems through some phone app and/or requires creating an account. I'd surely cave for $500. Or the five-dollar bill th

  • The guaranteed payout was less than the cost of a burger at a fast food joint.

    Make it a guaranteed $20 payout and weâ(TM)d be talking.

    • Read it again. It's not a dollar, it's a hundred.

      • Re: (Score:3)

        by djgl ( 6202552 )

        The guaranteed payout was $5.

      • Re: (Score:3)

        by Entrope ( 68843 )

        The guaranteed payout was $5, the expected value of a 1-in-20 chance of winning $100.

        Unless I regularly went to wherever the gift card is for, I would be inclined to go for the $100 lottery over a guaranteed $5. The overhead to use a gift card factors into the expected return.

    • The guaranteed payout was less than the cost of a burger at a fast food joint.

      Make it a guaranteed $20 payout and weâ(TM)d be talking.

      I suspect, since a $20 payout would require a chance to win $400, the results would be similar.

  • You're going to get people who will do it because they're bored / for the experience, and you're going to get people who do it because they want the reward. Very rarely will you get some individual motivated to do it purely to assist in the advancement of science.

    Unless you're doing a study on financial motivation, selecting study participants based on those who are willing because you offered some kind of enticement isn't a big enough issue to worry about trying the likely-impossible task of working aroun

    • You're missing the point. All the science that has ever been done on the assumption that an offer of a gift card of a value of $100 (2025 dollars) or less is enough to motivate across the psychological spectrum has been called into question. Those not motivated, as it turns out there are a lot more than we thought, are under-represented in those surveys which could skew results badly. Especially where low probabilities are compensated by large survey size.

      • Re: (Score:2)

        by wings ( 27310 )

        At least for me there are other factors too.
        I skimmed the paper and didn't see what questions they wanted to ask in the survey. For only $5 or the 1 in 20 chance of $100 I'd want to know what the questions are up front and what they will do with the answers and if they collect any personally identifiable information.

        • Re: (Score:3)

          by rossdee ( 243626 )

          Or you get most of the way through the survey, and then they ask for your cell number or your taxable income...
          (and then just close the web page in disgust)

          • ^^^ THIS

            Most of these "surveys" are scams. Or they have a pre-set agenda looking for confirmation. You can tell by the questions they ask, how they are asked, what they don't ask, and then the PII information they are desperate to collect.

            I am fine participating in good surveys, but I haven't seen one for many years. Nothing is more frustrating than being required to answer a vague or broad question/statement with rigid set of answers that don't apply.

            Reminds me of this famous joke survey question:

            How di

        • Or more formally, you have the problem of a self selected population.

      • Did you just say people are not the Rational Agents, as Economics professors assume?

    • Years ago when I was younger and I was the target audience for marketing, I would get invited to marketing surveys. This was maybe 20 years ago. The payout was cash, not some wonky gift card that is going to track where I spent it. I did the surveys usually, they required in person usually and the payout 20 years ago was between 100-200. A 5 dollar payout is a joke, especially with a gift card that will further "enhance" the study by tracking you. So today a study like I did would need to pay close to a gr

  • The propensity to refuse payment is more than four times as large among individuals 50 and older compared to younger individuals

    They've been around long enough to suspect some shenanigans ...

    • The propensity to refuse payment is more than four times as large among individuals 50 and older compared to younger individuals

      They've been around long enough to suspect some shenanigans ...

      +5 insightful.

      I wonder if they send a 1099-Misc with the money or winnings?

      for non-Americans, if you win 25 dollars, or a guaranteed 5 dollars, that money is taxable. A 1099 is how it's kept track of. So right away, I suspect a trap.

      Very unlikely now, but 25 dollars is not worth it to me to find out.

  • Not surprising, given even fractions are a foriegn concept.

  • THERE's the problem.

    I freaking HATE those things.

    Give me actual physical cash, or at least an actual physical gift card/Visa card and the results will be different.

  • 'Gift cards' suck; news at 11. (Score:3)

    by fuzzyfuzzyfungus ( 1223518 ) on Saturday April 12, 2025 @09:24AM (#65300071) Journal
    I realize that it's important to actually quantify it in detail, since trying to offer as little money as possible to obtain the required number of survey responses/test results/etc. is a pretty standard surveying technique; but it seems a little wild to expect people to treat $5 or maybe-$100 as identical(or $5 as preferable thanks to risk aversion) when any 'electronic gift card' that won't politely go straight into your bank account or the internal records of some vendor you actually use is essentially not real money at all.

    The process would be more of a hassle; but I suspect you'd see at least some difference if you were using cash. There would still be the competing psychological effect of 'very mundane amount of money' vs. 'modest chance at enough to do something you hadn't planned to'; but $5 is actually worth $5; no paperwork, no tie to specific retailer, doesn't start charging you 25 cents a month after 3 months.

  • 'chance of winning' (Score:3)

    by oumuamua ( 6173784 ) on Saturday April 12, 2025 @09:47AM (#65300113)
    How gullible can you be? Whenever you see that, you know there is NO winner. You're just being scammed. Have they ever sent you an email about who did win? And if there was a winner how do you know they weren't connected to the company in some way? Finally if it is a small beans prize like a gift card, and you 'won', guess what EVERYONE wins.

  • First, it's gambling
    Second, it's gift cards
    Third, it's a trivial amount of money

    Few people know enough about statistics to accurately assess odds and some simply hate gambling
    Gift cards suck and are associated with scams
    Do it with meaningful amounts of cash

    • "Few people know enough about statistics to accurately assess odds and some simply hate gambling"

      Why is our economic policy set assuming everyone is a rational calculating agent?

  • including a one-in-twenty chance of winning a $100 electronic gift card, a guaranteed electronic gift card with the same expected value

    What does this mean? The same as what? People chose to maybe get a $100 prize as opposed to definitely getting a $100 prize? I don't get this.

  • Love when companies act like I owe them a review for a service I paid for. My time and privacy is valuable too assholes. Its too valuable for a chance at a sweepstakes I will never win or to go through some 3rd party marketing firm who's sole existence is to broker my info. If you want to offer me a discount or a rebate, ill consider it but the funny thing is that for companies that are good, they dont have to do this. There is already a line going out the door.

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