Saturday, May 19, 2018

The hidden benefits and costs of Corporate Social Responsibility

Another fabulous pointer from MarginalRevolution:

John List started his own firm and ran randomized control trials in different cities (varying the wage and the CSR or the "corporate social responsibility" mission of the firm). He found that it was easier to attract workers to the CSR mission (adverse selection):

...the C.S.R. job attracts about 33 percent more in application rates, so ... “Rather than paying someone $15 instead of $11, I can just say I’m a C.S.R. firm and pay them $11 and I’m going to get the same ... volume of recruits.”

And that these workers were 25% more productive on average.  However, they were also less ethical, 24% more of these workers were found to be cheating on the tasks that they were being paid to do (moral hazard).  Apparently, having a CSR mission gives the workers a moral "license" to behave less ethically.  

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