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Testing consumer theory: evidence from a natural field experiment.

ABSTRACT: We present evidence from a natural field experiment designed to shed light on whether individual behavior is consistent with a neoclassical model of utility maximization subject to budget constraints. We do this through the lens of a field experiment on charitable giving. We find that the behavior of at least 80% of individuals, on both the extensive and intensive margins, can be rationalized within a standard neoclassical choice model in which individuals have preferences, defined over own consumption and their contribution towards the charitable good, satisfying the axioms of revealed preference.

SUBMITTER: Adena M

PROVIDER: S-EPMC6956945 | biostudies-literature | 2017

REPOSITORIES: biostudies-literature

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Testing consumer theory: evidence from a natural field experiment.

Adena Maja M Huck Steffen S Rasul Imran I

Journal of the Economic Science Association 20171128 2

We present evidence from a natural field experiment designed to shed light on whether individual behavior is consistent with a neoclassical model of utility maximization subject to budget constraints. We do this through the lens of a field experiment on charitable giving. We find that the behavior of at least 80% of individuals, on both the extensive and intensive margins, can be rationalized within a standard neoclassical choice model in which individuals have preferences, defined over own cons ...[more]

PMID: 31998600

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Project description:BackgroundReductions in health insurance enrollment outreach could have negative effects on the individual health insurance market. Specifically, consumers may not be informed about the availability of coverage, and if some healthier consumers fail to enroll, there could be a worse risk pool for insurers. Kentucky created its own Marketplace, known as kynect, and adopted Medicaid expansion under the Affordable Care Act, which yielded the largest decline in adult uninsured rate in the United States from 2013 to 2016. The state sponsored an award-winning media campaign, yet after the election of a new governor in 2015, it declined to renew the television advertising contract for kynect and canceled all pending television ads with over a month remaining in the 2016 open enrollment period.ObjectiveThe objective of this study is to examine the stark variation in television advertising across multiple open enrollment periods in Kentucky and use this variation to estimate the dose-response effect of state-sponsored television advertising on consumer engagement with the Marketplace. In addition, we assess to what extent private insurers can potentially help fill the void when governments reduce or eliminate television advertising.MethodsWe obtained television advertising (Kantar Media/Campaign Media Analysis Group) and Marketplace data (Kentucky Health Benefit Exchange) for the period of October 1, 2013, through January 31, 2016, for Kentucky. Advertising data at the spot level were collapsed to state-week counts by sponsor type. Similarly, a state-week series of Marketplace engagement and enrollment measures were derived from state reports to Centers for Medicare and Medicaid Services. We used linear regression models to estimate associations between health insurance television advertising volume and measures of information-seeking (calls to call center; page views, visits, and unique visitors to the website) and enrollment (Web-based and total applications, Marketplace enrollment).ResultsWe found significant dose-response effects of weekly state-sponsored television advertising volume during open enrollment on information-seeking behavior (marginal effects of an additional ad airing per week for website page views: 7973, visits: 390, and unique visitors: 388) and enrollment activity (applications, Web-based: 61 and total: 56).ConclusionsState-sponsored television advertising was associated with nearly 40% of unique visitors and Web-based applications. Insurance company television advertising was not a significant driver of engagement, an important consideration if cuts to government-sponsored advertising persist.

Dataset Information

Testing consumer theory: evidence from a natural field experiment.

Publications

Testing consumer theory: evidence from a natural field experiment.

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