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This is a super interesting piece of behavioral economics in action. We know from Prize Linked Savings Accounts that people prefer a really small change of win

This is a super interesting piece of behavioral economics in action. We know from Prize Linked Savings Accounts that people prefer a really small change of winning a lot to a really high chance of winning a little. [0] [1] > The new program replaces that system with a lottery. If United meets its goals, all employees would have a chance to win prizes, including Mercedes automobiles and cash up to $100,000. About 1.6 percent of employees would win something. If I recall, there was a study that showed that people were happier when given a paid vacation than when given an equivalent bonus. [0] http://www.hbs.edu/faculty/Publication%20Files/08-061_17c22e32-fe06-4b4a-8b5e-e09227fc8104.pdf http://www.hbs.edu/faculty/Publication%20Files/08-061_17c22e... [1] https://www.sciencedirect.com/science/article/pii/S0167268114002194 https://www.sciencedirect.com/science/article/pii/S016726811...

mattnewport 9y ago
The replication crisis most associated with psychology also appears to extend to many behavioral economics results. There's good reason to be skeptical of many of these studies.
- bcherny 9y ago
  Can you talk more about that? Are you saying those studies haven’t been replicated?
  - mattnewport 9y ago
    I don't know about those studies in particular but the general replication crisis https://en.m.wikipedia.org/wiki/Replication_crisis https://en.m.wikipedia.org/wiki/Replication_crisis which is most widely discussed in psychology is also a concern in economics https://theconversation.com/the-replication-crisis-has-engulfed-economics-49202 https://theconversation.com/the-replication-crisis-has-engul... Behavioral economics research in some respects has more in common with psychology research than other areas of economics. It is also associated with a particular ideological bent that seeks to undermine the traditional assumption in economics that people can be approximated as rational actors. While there is value in recognizing where that assumption can break down, behavioral economics is often used to justify policies or interventions that traditional economics would not recommend on the basis that people can't be trusted to act in their own best interests so their preferences should be ignored or overridden by benevolent experts who somehow are miraculously immune from the same failures of rationality that the rest of us proles are prone to.
sk5t 9y ago
A low-odds, high-reward gamble may still be preferred to its complement, but we must also consider aversion to loss of the bonus to which employees are accustomed. The new program could--but probably still wouldn't--make sense if it were an incentive in addition to the bonus.

mattnewport 9y ago

The replication crisis most associated with psychology also appears to extend to many behavioral economics results. There's good reason to be skeptical of many of these studies.

bcherny 9y ago
Can you talk more about that? Are you saying those studies haven’t been replicated?
- mattnewport 9y ago
  I don't know about those studies in particular but the general replication crisis https://en.m.wikipedia.org/wiki/Replication_crisis https://en.m.wikipedia.org/wiki/Replication_crisis which is most widely discussed in psychology is also a concern in economics https://theconversation.com/the-replication-crisis-has-engulfed-economics-49202 https://theconversation.com/the-replication-crisis-has-engul... Behavioral economics research in some respects has more in common with psychology research than other areas of economics. It is also associated with a particular ideological bent that seeks to undermine the traditional assumption in economics that people can be approximated as rational actors. While there is value in recognizing where that assumption can break down, behavioral economics is often used to justify policies or interventions that traditional economics would not recommend on the basis that people can't be trusted to act in their own best interests so their preferences should be ignored or overridden by benevolent experts who somehow are miraculously immune from the same failures of rationality that the rest of us proles are prone to.

sk5t 9y ago

A low-odds, high-reward gamble may still be preferred to its complement, but we must also consider aversion to loss of the bonus to which employees are accustomed. The new program could--but probably still wouldn't--make sense if it were an incentive in addition to the bonus.