Séminaire

Alcohol and Self-Control: A Field Experiment in India

Frank Schillbach (Massachusetts Institute of Technology)

27 avril 2017, 11h00–12h30

Toulouse

Salle MF 323

Development, Labor and Public Policy Seminar

Résumé

High levels of alcohol consumption are more common among the poor. This fact could have economic consequences beyond mere income effects because alcohol impairs mental processes and decision-making. Since alcohol is thought to induce myopia, this paper tests for impacts on savings behavior and on self-control. In a three-week field experiment with low-income workers in India, I provided 229 individuals with a high-return savings opportunity and randomized incentives for sobriety. The incen- tives significantly reduced daytime drinking as measured by decreased breathalyzer scores, which in turn increased savings by approximately 60 percent. This effect is not purely mechanical as it does not appear to be explained by changes in income net of alcohol expenditures. Moreover, consistent with enhanced self-control due to lower inebriation levels, incentivizing sobriety reduced the impact of a savings com- mitment device. Finally, alcohol consumption itself is prone to self-control problems: over half of the study participants were willing to sacrifice money to receive incentives to remain sober, exhibiting demand for commitment to increase their sobriety. Taken together, these findings suggest that heavy alcohol consumption is not just a result of self-control problems, but also creates self-control problems in other areas, potentially even exacerbating poverty by reducing savings.

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