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April 10, 2019

Curbing a desire to drink

Rickshaw drivers in India.

Steve Evans/Wikimedia Commons

Drinking on the job is generally frowned upon in most professions. There are good reasons for this: being intoxicated may reduce self-control and make workers less safe and productive.

Nevertheless, heavy alcohol consumption is common among male low-income workers in India and other developing countries. Workers often spend substantial shares of their family incomes on alcohol, raising questions about how to reduce their drinking.

In the April issue of the American Economic Review, MIT economist Frank Schilbach investigates the demand among Indian cycle-rickshaw drivers to remain sober during the day. He tested whether financial incentives could curb their desire to day drink and whether they would be willing to give up money to receive such incentives.

Schilbach conducted a three-week field experiment in which more than 200 drivers were separated into three groups: those who were paid to remain sober (the incentive group), a control group that received a guaranteed payment regardless of their drinking, and a “choice group” that had the option to pick between the two. It was this third group that Schilbach used to measure workers’ desire for sobriety. All drivers were breathalyzed daily.

Those who chose the “incentive” option—to be paid to remain sober—would receive 60 rupees (about $1) while sober drivers would get 120 rupees ($2). If they chose Option B—the guaranteed payments—they would get 90 rupees, 120 rupees, or 150 rupees ($2.50).

Individuals’ willingness to choose the sobriety incentives even when they could potentially earn more with the unconditional payment would reveal their desire to be sober on the job and thus underlying self-control problems.

Figure 2 from Schilbach (2019)

The figure above shows that one third to one half of the study’s participants chose sobriety incentives each week of the experiment, even when they potentially could have earned more by taking the guaranteed money. The money they gave up is not insignificant, representing between 10 and 30 percent of their daily earnings.

The high demand for sobriety is not the result of misunderstanding, Schilbach said. Each time they were allowed to choose, drivers were informed in advance about the potential losses as a consequence of their choice.

This demand indicates self-control problems to a greater extent than found in many other settings. It is difficult to know why there was such high demand, Schilbach said. One possible explanation for why drivers were willing to “pay” for sobriety is that the drivers believe the costs of their drinking are even greater. They had spent substantial amounts of their income consuming alcohol daily. Compared to those expenses, forgoing study payments in order to commit to sobriety may have seemed a relatively minor cost.

This willingness to pay for the incentives may indicate that drinkers themselves—in addition to other individuals who may be subject to adverse effects of alcohol—might prefer increases in alcohol prices, thus possibly strengthening the case for increased taxes or other policies to reduce alcohol consumption.