“Demographics and the Political Sustainability of Pay-as-you-go Social Security” (with Theodore C. Bergstrom), CESifo/Delta Conference on Strategies for Reforming Pension Schemes, refereed conference volume, 2008
Abstract: The net present value of costs and benefits from pay-as-you-go social security is negative for young people and positive for the elderly. If people vote their financial self-interest, there is a pivotal age such that those who are younger favor smaller benefits and those who are older favor larger benefits. We estimate the expected present value of benefits and costs to US voters of each age and sex for a small permanent increase in social security benefits. We find that if voters vote their self-interest, a substantial majority will favor maintaining benefit levels at least at current levels. Over the next four decades, as the population ages, maintaining social security will become more expensive. Consequently, the pivotal age at which voters begin to favor social security will rise. At the same time, the median age of voters will also rise and remain above the pivotal age. Throughout the period, a majority of selfish voters would favor maintaining current benefit levels. We also investigate support for changes in the age at which benefits begin. Self-interest on this issue does not divide simply between old and young. Young voters and some old voters will favor a later benefits age, while middle-aged workers will oppose. Over the next 30 years, proposals for an immediate once-and-for-all increase in the benefits age would be defeated in majority voting. Proposals for a deferred, gradual increase in the benefits age might under some circumstances receive majority support.
“A Route Choice Experiment with an Efficient Toll,” in Networks and Spatial Economics (Special Issue on Transport Infrastructure), 2012
Abstract: Traffic congestion is a substantial time cost for many urban commuters. This paper studies the response of subjects in an experimental setting in which subjects choose between a short direct route that becomes increasingly congested as more people travel on it and a more indirect route that does not become congested. More specifically, I investigate how subjects respond to the use of a toll that theory predicts will minimize travel time costs. The experimental results reported in this paper show that this toll comes very close to achieving efficient use of the travel network.
“Letting Down the Team? Social Effects of Team Incentives” (with Philip Babcock, Kelly Bedard, Gary Charness, and Heather Royer), forthcoming in the Journal of the European Economic Association
Abstract: This paper estimates social effects of incentivizing people in teams. In three field experiments featuring exogenous team formation and opportunities for repeated social interactions, we find large team effects that operate through social channels. In particular, assignment to a team treatment increases productivity by 9 to 17 percent relative to an individual incentive treatment, even though the individual incentive yields a higher private return. Further, we find that in a choice treatment individuals overwhelmingly prefer the individual incentive to the team incentive, despite the latter being more effective. These results are most consistent with the team effects operating through guilt or social pressure as opposed to pure altruism.