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Environmental Economics Seminar: Nudges and Federal Program Participation: A Field Experiment with the Conservation Reserve Program

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Date(s): January 29, 2014; 1 - 2:30 PM

Location: Room 4128, William Jefferson Clinton West Building, 1301 Constitution Ave., NW, Washington, DC

Contact: Carl Pasurka, 202-566-2275

Presenter: Paul Ferraro, Nathaniel Higgins, and Steven Wallander
(Economic Research Service, U.S. Dept. of Agriculture)
Presenting: Nathaniel Higgins and Steven Wallander

Description: Non-pecuniary, behavioral interventions, or “nudges,” have a growing influence on market and policy outcomes. Some nudges incorporate new insights based on research in psychology and behavioral economics – such as bounded rationality or framing effects or loss aversion. Other interventions are fairly traditional provision of information, such as advertising and outreach efforts. For both types of nudges, researchers can gain new insights through the use of experimental research methods. In this paper, we bring this approach to the agricultural economics literature by conducting a large-scale field experiment to examine the effectiveness of low-cost, behavioral outreach nudges within one of the United States Department of Agriculture’s (USDA) largest conservation programs. Since this outreach experiment occurs within the context of a competitive auction, any induced changes in participation may improve program outcomes either by encouraging more competitive bidding or simply by providing USDA with a larger pool of offers from which to purchase environmental services.

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