Working Paper: NBER ID: w21210
Authors: Michael Hallsworth; John A. List; Robert D. Metcalfe; Ivo Vlaev
Abstract: Framing remains one of the pillars of behavioral economics. While framing effects have been found to be quite important in the lab, what is less clear is how well evidence drawn from naturally-occurring settings conforms to received laboratory insights. We use debt obligation to the UK government as a case study to explore the ‘omission bias’ present in decision making with large stakes. Using a natural field experiment that generates nearly 40,000 observations, we find that repayment rates are roughly doubled when the act is reframed as one of commission rather than omission. We estimate that this reframing of the perceived nature of the action generated over $1.3 million of new yield. We find evidence that this behavior may result from a deliberate ‘omission strategy’, rather than a behavioral bias, as is often assumed in the literature. Our natural field experiment highlights that behavioral economics is much more than a series of empirical exercises to quench the intellectual curiosity of academics.
Keywords: Behavioral Economics; Framing Effects; Debt Repayment; Omission Bias; Natural Field Experiment
JEL Codes: C9; C93; H2; K0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| omission framing (D91) | perceived severity of nonpayment (G33) |
| commission framing (D47) | perceived severity of nonpayment (G33) |
| framing of debt repayment requests (F34) | repayment behavior (G51) |
| framing manipulation (E71) | repayment rates (G51) |
| omission to commission letters (Y20) | repayment timing (G51) |