Some conditions (not) affecting selection neglect: Evidence from the lab

Causal misperceptions of the part-time pay gap

“…Although de-biasing does not fully eliminate the effect of the correlation treatment, providing information about the selection rule substantially reduces and renders insignificant the effect of the correlation treatment (+1.29 p.p., p > 0.1). Consistent with work by López-Pérez et al (2022) showcasing that individuals account for selection effects when they have strong evidence about the DGP, I find that educating individuals about selection effects seems to be effective in mitigating causal misperceptions in the context of the part-time wage penalty.…”

“…Individuals may neglect that they only observe a selective sample when they observe the outcomes of other individuals ('selection neglect bias'), which can lead to biased expectations about their own outcomes (e.g. Jehiel 2018, Koehler & Mercer 2009, Barron et al 2019, López-Pérez et al 2022).…”

“…I further use the experimental design to study the role of de-biasing and to test whether selection neglect persists when individuals are informed of the data generating process (DGP), as shown in some laboratory settings (Barron et al 2019) but not others (López-Pérez et al 2022). To this end, I provide the second treatment group with an alternative information treatment that also reports the average pay gap between full-time and part-time workers, but additionally educates subjects about the selection mechanism driving the observed wage gap.…”

“…Firstly, it adds to existing work on causal misperceptions and selection neglect. In contrast to previous work by Jehiel (2018), Koehler & Mercer (2009), Barron et al (2019), Spiegler (2020a), andLópez-Pérez et al (2022), this paper uses representative survey data to study selection neglect outside laboratory and theoretical settings. Building on the framework developed by Barron et al (2019), this paper tests several hypotheses from selection neglect theory in a relevant labor market context, the part-time wage penalty.…”

Selection Neglect and Political Beliefs

“…What drives heterogeneity in selection neglect? Several studies explicitly encourage participants to think about the information they don't see (e.g., Enke, 2020) or otherwise make the selection process more transparent (López-Pérez et al, 2022), which generally decreases errors. Other's use more subtle cues like telling subjects they are only seeing the performance of two out of 30 mutual funds run by a company in an advertisement rather than just telling them it is the performance of two funds (Koehler and Mercer, 2009).…”