Incentive-Based Pay and Worker Effort in Public Programs: Experimental Evidence from the Weatherization Assistance Program

• Environmental and Energy Economics Workshop

Date and Location

Wednesday, November 1, 2023, 1:10 PM - 2:30 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities

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. The bonuses generate $5.39-14.53 in social benefits for every dollar invested and increase the social net benefits from home weatherization more than two-fold from net negative ($-488) to net positive ($652). We find evidence that these cost-effectiveness improvements result from more efficient allocation of effort within the program and we do not find evidence of increased deficiencies among non-incentivized tasks.

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