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Effect of mood and worker incentives on workplace productivity†

Author

Listed:
  • Decio Coviello
  • Erika Deserranno
  • Nicola Persico
  • Paola Sapienza

Abstract

We study the causal effect of mood on the productivity of call-center workers. Mood is measured through an online “mood questionnaire” which the workers are encouraged to fill out daily. We find that better mood actually decreases worker productivity for workers whose compensation is largely fixed. The negative effect of mood is attenuated for workers whose compensation is based on performance (high-powered incentives). This finding holds both at a correlational level and in two IV settings, where mood is instrumented for by weather or, alternatively, by whether the local professional sports team played/won the day before. We rule out a number of threats to the exclusion restrictions, and discuss the mechanisms that could generate our findings (JEL J24, J28, M52, C26).

Suggested Citation

  • Decio Coviello & Erika Deserranno & Nicola Persico & Paola Sapienza, 2024. "Effect of mood and worker incentives on workplace productivity†," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 40(2), pages 362-393.
    • Handle: RePEc:oup:jleorg:v:40:y:2024:i:2:p:362-393.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewac017
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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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