WHY NOT JUST ASK?
All these clever ways of working out the consequences of windfalls are very impressive. There is, however, a simpler approach. Why not just … ask?
Historically, merely surveying people like this would have been pretty controversial. Stefanie Stantcheva of Harvard University says that perhaps a decade ago economists didn’t trust this technique at all. They felt that people’s words were unreliable, and it was far better to measure their deeds.
But in many cases the perfect data or setting just doesn’t exist. And recent work by Stantcheva and co-authors has shown several cases where what people say they would do comes pretty close to what they actually do. Over the past few years, she says that acceptance of surveys has risen a lot.
A new working paper by researchers at the Centre for Economic Policy Research and Stanford University, deploys this approach, asking Europeans what they would do if they received sums ranging from €5,000 to €100,000.
Below around €25,000, people say they would plough on with work. But for sums between that threshold and €100,000, their likelihood of working falls by 3 percentage points on average. Women, as well as people who are older, who have less debt or who are close to retirement are more likely to drop out.
Stantcheva says that survey questions are most reliable when the hypothetical situations are “very close to daily lives”. So perhaps anyone’s views on what they would do with a surprise €100,000 should be taken with a grain of salt.
Still, for the smaller sums relevant for most policy interventions, these effects seem pretty tiddly. Perhaps I’m not such a weirdo after all.
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