Summary
Do professional academics respond to incentives? One would naturally answer this question with a dismissive “of course”, everybody responds to incentives. True as this might be, as always the devil is in the details, and the challenge is to define these details correctly and persuasively, so that policy interventions, for example in the design of reforms to the university system, can be designed effectively.
In this Nottingham School of Economics working paper Checchi, De Fraja and Verzillo develop a theoretical model with the aim of understanding the principles which determine an academic’s response to incentives; they then test this theoretical model in the very specific set-up of Italian academia. The Italian university sector is very well suited to this task, because it follows a very complex system of nationally mandated rules. Because these rules are explicit and are applied uniformly across universities and subject areas, they lend themselves precisely to formal modelling of their effects. The model we set up is a variant of a special type of auction: the “multi-unit all-pay auction”, where N bidders compete to be awarded one of K (identical) prizes: the auction is “all-pay”, because, unlike the traditional auction, each bidder pays her bid, whether or not she wins, and is “multi-unit” because the highest K bidders receive the prize. The analogy with academia stems from viewing the academics as exerting effort to obtain publications which they can then use (as “bids”) to obtain a promotion.
De Fraja and co-authors test the theoretical model with a large dataset, which includes all the individuals who have held a post in an Italian university at any time between 1990 and 2011. Output is measured as the (quality and number of co-authors adjusted) number of articles published in journals listed in the Web of Knowledge, suitably adjusting to account for the different publication patterns in different disciplinary areas.
The model predicts that different academics respond differently to the same exogenous changes. This suggests an empirical strategy that allows for different responses by different individuals according to whether their academic standing is high or low.
De Fraja and co-authors find the theoretical prediction of the model confirmed, not just broadly, but in many important details as well. Individuals respond to changes in the variables which will determine their likelihood of being promoted, namely the number of posts available, the number of competitors and the likely importance of that dimension for the panel's decisions, roughly in line with the non-linear fashion predicted theoretically. High ability individuals exert more effort if the measured dimension of output increases in importance or if the sector becomes more competitive, either through an increase in the number of potential applicants or through a reduction in the number of posts available, whereas lower ability individuals exert less effort in response to these changes.
The empirical analysis thus confirms that the multi-unit all-pay auction model captures the behaviour of Italian economists. To the extent that the analysis delivers a policy oriented message it indicates that Italian academics respond to incentives in the manner predicted by the multiple unit all-pay auctions, even though these incentives are generally considered to be weak. Although suggestive, this conclusion might therefore be interpreted as an indication that strengthening incentives, for example by rewarding success more explicitly, might generate the expected responses in the direction of increase effort and output by Italian researchers. On the other hand, the model suggests that altering the mechanics of the appointment process, as many governments have tried in recent years, is unlikely noticeably to alter incentives.
Download the paper in PDF format
School Discussion Paper 2014-04, Publish or Perish: An Analysis of the Academic Job Market in Italy by Daniele Checchi, Gianni De Fraja and Stefano Verzillo, July 2014
Authors
Daniele Checchi, Gianni De Fraja and Stefano Verzillo
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Posted on Tuesday 1st July 2014