Faculty Research

Rady professors are hard at work researching various topics, ranging from financial misconduct in cities to whether or not incentive programs encourage individuals to get screened for cancer.

Are Certain Cities More Prone to Financial Misconduct?

U.S. companies examine many elements in deciding where to locate their businesses – everything from the cost of labor, taxes, real estate prices and utilities to non-cost factors like workforce skill level, infrastructure, regulations, cost of living and quality of life. But, is there a way to determine which city has the most reliable, scrupulous employees? New research from Associate Professor Christopher Parsons at the Rady School of Management examines how the culture of a city contributes to the trustworthiness of employees.

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Financial misconduct rates differ widely between major U.S. cities, about as much as between industries. Using a dataset of financial misconduct collected since 1970, Parsons and his fellow researchers found that financial mismanagement disproportionately clusters in certain cities. They also determined that city-level culture, rather than differences in enforcement or company characteristics, best accounts for these patterns.

Parsons examined the culture of the cities by using the behavior of its residents, such as spousal infidelity, rather than the population attributes like age, wealth or religious background. For example, financial misconduct rates are strongly related to other unethical behavior in the city, involving its politicians, doctors, and (potentially unfaithful) spouses. The unethical behavior was measured by data on federal convictions for corruption-related crimes by elected officials, information on doctors who receive payments from drug companies and their subsequent prescriptions, and data on registered users of the extramarital affair website Ashley Madison.

The research found that Miami, St. Louis, Dallas, Houston, New York, Los Angeles, Washington, D.C., Denver, Chicago and San Francisco are cities where financial misconduct is most prevalent. Indianapolis, Seattle, Minneapolis, Cleveland, Atlanta, Boston, Orlando, Phoenix, Philadelphia and Detroit had the least amount of financial misconduct. The research suggests that city-specific culture factors play a role in the trustworthiness of employees – a valuable lesson for companies when determining where to locate.

The Effectiveness of Financial Incentives in Promoting Cancer Screening

Colorectal cancer is the second leading cause of cancer death in the U.S. However, motivating individuals to be screened for colorectal cancer, especially those with financial barriers or a fear of screening methods, has proved challenging.

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Principles of behavioral economics show that financial incentives can be used to alter behavior. As such, offering a small financial incentive to vulnerable populations has been suggested as a solution to insufficient colorectal cancer screening rates. Rady School Associate Professor Ayelet Gneezy recently conducted and published a study in which primary care patients were mailed colorectal test outreach, outreach plus a $5 incentive, or outreach plus a $10 incentive.

The necessary screening completion rates of the groups were 36.9 percent with a financial incentive, compared to 36.2 percent with no financial incentive. These results did not vary significantly based on age, sex, ethnicity, or neighborhood poverty rate. As a result, the study concludes that financial incentives in the amount of $5 or $10 do not have any significant effect on completion of colorectal cancer screening.

The study was conducted in Fort Worth, Texas on a sample of 10,000 uninsured individuals aged 50 to 64 who had visited their primary care physician at least once in the previous year. Individuals were randomly assigned to be in either the control group with no financial incentive, in the $5 compensation group, or in the $10 compensation group.

These findings are some of the first regarding small financial incentives and cancer screening. Although they cannot be applied to other types of cancer screening or larger financial incentives, the findings are important in understanding the applications of behavioral economics.

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