IDEAS home Printed from https://ideas.repec.org/a/kap/atlecj/v47y2019i4d10.1007_s11293-019-09644-3.html
   My bibliography  Save this article

Income and Effort: An Instrumental Variables Approach

Author

Listed:
  • Wei Chen

    (Lewis University)

Abstract

Does income affect how much people value effort? If income has a negative causal effect on how much effort is valued, an increase in income will adversely affect the cultivation of a growth mindset. Achievement will then be affected because intelligence, abilities, skills, and intrinsic motivation are affected. By utilizing data from the 2010 Chinese General Social Survey, this paper shows that doubling income reduces the probability of an individual valuing effort by two to three percentage points. This study is the first to examine the effect of income on how much effort is valued. It addresses the endogeneity of income by using the regional unemployment rate, regional Consumer Price Index, and regional retail growth rate as instruments. Placebo tests were performed to evaluate the validity of the instruments. The negative causal effect of income on how much effort is valued implies that creating an environment where intrinsic motivations can flourish is of greater importance among higher income workers. Promoting employees with higher income may have a negative effect on engagement through the cultivation of a growth mindset.

Suggested Citation

  • Wei Chen, 2019. "Income and Effort: An Instrumental Variables Approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(4), pages 485-497, December.
    • Handle: RePEc:kap:atlecj:v:47:y:2019:i:4:d:10.1007_s11293-019-09644-3
    DOI: 10.1007/s11293-019-09644-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11293-019-09644-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11293-019-09644-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paul Frijters & David W. Johnston & Manisha Shah & Michael A. Shields, 2009. "To Work or Not to Work? Child Development and Maternal Labor Supply," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 97-110, July.
    2. Bettinger, Eric & Ludvigsen, Sten & Rege, Mari & Solli, Ingeborg F. & Yeager, David, 2018. "Increasing perseverance in math: Evidence from a field experiment in Norway," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 1-15.
    3. Damgaard, Mette Trier & Nielsen, Helena Skyt, 2018. "Nudging in education," Economics of Education Review, Elsevier, vol. 64(C), pages 313-342.
    4. Liu, Dong & Jiang, Kaifeng & Shalley, Christina E. & Keem, Sejin & Zhou, Jing, 2016. "Motivational mechanisms of employee creativity: A meta-analytic examination and theoretical extension of the creativity literature," Organizational Behavior and Human Decision Processes, Elsevier, vol. 137(C), pages 236-263.
    5. Layard, R. & Mayraz, G. & Nickell, S., 2008. "The marginal utility of income," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1846-1857, August.
    6. Lazear, Edward P, 1986. "Salaries and Piece Rates," The Journal of Business, University of Chicago Press, vol. 59(3), pages 405-431, July.
    7. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    8. Romaniuc, Rustam, 2017. "Intrinsic motivation in economics: A history," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 67(C), pages 56-64.
    9. Roland Bénabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(3), pages 489-520.
    10. Xu, Xin, 2013. "The business cycle and health behaviors," Social Science & Medicine, Elsevier, vol. 77(C), pages 126-136.
    11. Kuehnle, Daniel, 2014. "The causal effect of family income on child health in the UK," Journal of Health Economics, Elsevier, vol. 36(C), pages 137-150.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. McCausland, David & Pouliakas, Konstantinos & Theodossiou, Ioannis, 2005. "Some are Punished and Some are Rewarded: A Study of the Impact of Performance Pay on Job Satisfaction," MPRA Paper 14243, University Library of Munich, Germany.
    2. Josse Delfgaauw & Robert Dur, 2008. "Incentives and Workers' Motivation in the Public Sector," Economic Journal, Royal Economic Society, vol. 118(525), pages 171-191, January.
    3. Alexander Kalgin & Olga Kalgina & Anna Lebedeva, 2019. "Publication Metrics as a Tool for Measuring Research Productivity and Their Relation to Motivation," Voprosy obrazovaniya / Educational Studies Moscow, National Research University Higher School of Economics, issue 1, pages 44-86.
    4. Ballestar, María Teresa & Mir, Miguel Cuerdo & Pedrera, Luis Miguel Doncel & Sainz, Jorge, 2024. "Effectiveness of tutoring at school: A machine learning evaluation," Technological Forecasting and Social Change, Elsevier, vol. 199(C).
    5. Dalton, P.S. & Gonzalez Jimenez, V.H. & Noussair, C.N., 2015. "Paying with Self-Chosen Goals : Incentives and Gender Differences," Discussion Paper 2015-021, Tilburg University, Center for Economic Research.
    6. Jaana T Kari & Jaakko Pehkonen & Mirja Hirvensalo & Xiaolin Yang & Nina Hutri-Kähönen & Olli T Raitakari & Tuija H Tammelin, 2015. "Income and Physical Activity among Adults: Evidence from Self-Reported and Pedometer-Based Physical Activity Measurements," PLOS ONE, Public Library of Science, vol. 10(8), pages 1-15, August.
    7. Grieder, Manuel & Baerenbold, Rebekka & Schmitz, Jan & Schubert, Renate, 2022. "The Behavioral Effects of Carbon Taxes – Experimental Evidence," VfS Annual Conference 2022 (Basel): Big Data in Economics 264112, Verein für Socialpolitik / German Economic Association.
    8. Ólafsdóttir, Thorhildur & Ásgeirsdóttir, Tinna Laufey & Norton, Edward C., 2020. "Valuing pain using the subjective well-being method," Economics & Human Biology, Elsevier, vol. 37(C).
    9. Mariella Gonzales & Gianmarco León-Ciliotta & Luis R. Martínez, 2022. "How Effective Are Monetary Incentives to Vote? Evidence from a Nationwide Policy," American Economic Journal: Applied Economics, American Economic Association, vol. 14(1), pages 293-326, January.
    10. Garth Heutel & Christopher J. Ruhm, 2016. "Air Pollution and Procyclical Mortality," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(3), pages 667-706.
    11. Porto Natalia & Carella Laura & Rucci Ana Clara & Velazquez Cecilia, 2023. "Children living with disabilities and mother`s labor supply in developing countries: evidence from Argentina," Asociación Argentina de Economía Política: Working Papers 4686, Asociación Argentina de Economía Política.
    12. Peter, Frauke & Spiess, C. Katharina & Zambre, Vaishali, 2021. "Informing students about college: Increasing enrollment using a behavioral intervention?," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 524-549.
    13. Daniel Kuehnle, 2013. "The causal effect of family income on child health: A re-examination using an instrumental variables approach," Working Papers 133, Bavarian Graduate Program in Economics (BGPE).
    14. Fischer, Mira & Wagner, Valentin, 2019. "Effects of Timing and Reference Frame of Feedback," Rationality and Competition Discussion Paper Series 150, CRC TRR 190 Rationality and Competition.
    15. Kerris Cooper & Kitty Stewart, 2021. "Does Household Income Affect children’s Outcomes? A Systematic Review of the Evidence," Child Indicators Research, Springer;The International Society of Child Indicators (ISCI), vol. 14(3), pages 981-1005, June.
    16. Ye, Xiaoyang & Zhai, Muxin & Feng, Li & Xie, A’na & Wang, Weimin & Wu, Hongbin, 2022. "Still want to be a doctor? Medical student dropout in the era of COVID-19," Journal of Economic Behavior & Organization, Elsevier, vol. 195(C), pages 122-139.
    17. Dee, Thomas S., 2011. "Conditional cash penalties in education: Evidence from the Learnfare experiment," Economics of Education Review, Elsevier, vol. 30(5), pages 924-937, October.
    18. Bonilla, Sade, 2020. "The dropout effects of career pathways: Evidence from California," Economics of Education Review, Elsevier, vol. 75(C).
    19. Matthew Shannon, 2021. "The Impact of Victimisation on Subjective Well-Being," Working Papers 202123, School of Economics, University College Dublin.
    20. Cooper, Kerris & Stewart, Kitty, 2020. "Does household income affect children’s outcomes? A systematic review of the evidence," LSE Research Online Documents on Economics 107029, London School of Economics and Political Science, LSE Library.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:47:y:2019:i:4:d:10.1007_s11293-019-09644-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.