This grant funds a series of experiments designed by University of California, Berkeley economist Dmitry Taubinsky, to examine the welfare effects of nonfinancial policy interventions (NPIs). NPIs, more commonly known as “nudges,” are policy interventions designed to increase the attractiveness of prosocial behaviors through means other than decreasing the financial cost of that behavior. Examples include informational labels on products, salient reminders, default options, and praise and public recognition for desired behavior. Because nudges involve motivating people using nonfinancial means, quantifying the costs and benefits of NPIs is conceptually challenging. What if some people really liked what they were doing before they were nudged? What if some people don’t like being nudged at all, regardless of whether what is suggested would be good for them? What’s needed is a larger theoretical framework for evaluating the costs and benefits of nudges, a framework that includes the larger psychological costs that nudging may impinge on those who find themselves subject to it. In a series of experiments, Taubinsky will begin to develop such a framework, focusing on three issues.  First, what is the proper way to measure whether information nudges are well targeted in the sense that they change the behavior of people making the biggest mistakes? Second, what is the proper way to measure the psychological costs and benefits of motivating behavior by leveraging shame and pride through public recognition?  And third, what is the proper way to measure the discomfort that some people experience when moral suasion and other social factors create demands to act in prosocial ways? Grant funds will allow Taubinsky to field a series of experiments on each topic, along with a detailed analysis of his findings. Three peer-reviewed articles are anticipated.

Funds from this grant support the launch of a large-scale longitudinal field study aimed at understanding the “scientific productivity function,” the process that transforms research inputs (including grants, expertise, and equipment) into research outputs (including papers, patents, and students). Designed by Kyle Myers of Harvard Business School, Karim Lakhani, founding director of the Laboratory for Innovation at Harvard, Jerry and Marie Thursby, and with input from Dashun Wang, founding director of the Center for Science of Science and Innovation at Northwestern’s Kellogg School of Management, the effort will survey working scientists across the United States about how they conduct their work. Questions will focus on tracking and measuring four major determinants of scientific productivity: researcher preferences; resource allocation; management practices; and collaborative vs. competitive behaviors. In order to make sure the survey reaches a large, diverse, and representative sample of both physical and social scientists, the team has partnered with professional societies like the American Association for the Advancement of Science to help administer and promote it. The collected data will provide useful and necessary groundwork for the rigorous study of the determinants of scientific productivity that can be used to inform public discussion and policy about the most effective ways to support science and science-driven innovation.

Funds from this grant support an effort by a new non-profit, Actuate, led by Arati Prabhakar and Wade Shen, to begin to develop, build, and test “DataSafes,” an end-to-end, multi-party, and privacy-preserving system for sharing, linking, modeling, and analyzing sensitive data. Using advanced mathematical techniques like differential privacy and fully homomorphic encryption, DataSafes will provide a platform where data that would be dangerous to share openly can be analyzed in provably safe, trustworthy, and productive ways. Potential use cases include bankers who want to detect fraud patterns across their industry without identifying their clients, doctors who want to quantify disease spread without identifying their patients, or economists who want to identify poverty causes without identifying tax filers. Grant funds will allow Prabhakar and Shen to begin developing the open-source protocols, prototypes, standards, and code libraries that constitute the foundational technological architecture of the platform. Grant expenditures will be overseen by the Hopewell Fund, a fiscal sponsor for Actuate.

Behavioral economics has been highly successful at cataloguing patterns of bias, inconsistency, and even irrationality in everyday human decision-making. One of the great remaining challenges in the field, however, is to present a coherent explanation for why such behaviors exist, to derive the empirical findings of behavioral economics from theoretical models of how our brains work. This grant funds a joint project by economist Michael Woodford of Columbia University and neuroscientist Rava Azeredo da Silveira of the University of Basel, to develop more realistic models of the role that memory limitations play in generating the patterns of economic behavior documented by behavioral psychologists. Woodford and da Silveira will build a set of theoretical models that incorporate the assumption that memory carries a cost. As agents move through time, they create internalized perceptions of the world. Recalling these internal perceptions with flawless precision, they hypothesize, is very costly, and thus as we move from one period to the next, the rational reluctance to pay this “memory cost” produces an increasingly noisy representation of past internal perceptions, resulting in the systematic deviations from optimality observed by behavioral economists. Grant funds will support the theoretical modeling and comparative analysis, as well as a postdoctoral fellow and graduate student who will work on the project.

This grant supports a consensus study by the National Academies of Sciences, Engineering and Medicine (NASEM) on the evolution of behavioral economics on the occasion of the 40th anniversary of the field. Overseen by an independent committee of 15 experts from diverse fields—including economics, psychology, and cognitive science—the report will draw on a wide range of perspectives to synthesize four decades of research, catalog the field’s increasing relevance to policymaking, celebrate the work of seminal researchers, raise unaddressed challenges, and identify promising avenues for future study. The final report, tentatively titled Assessing Behavioral Economics at Age 40: A Consensus Study, will be widely disseminated and available to academics and the public alike.