Insignificance of Pecuniary and Time Search Costs

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In Simple Words

Imagine a library where checking out a book requires a one-minute phone call costing three cents. Offering a three-cent voucher or reducing phone wait time from four minutes to one minute does almost nothing to increase borrowing, because the true barrier is not the three cents or the three-minute wait, but deciding to initiate the call.

Lahore jobseekers in three trial rounds

Request a scheduled callback
Applications rose by 0.059 percentage points
Assigned proactive calls
About four times the application gain

Effects versus text-only control in the same three rounds; difference significant. Selected arms. Scheduling still required the jobseeker to act.

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Research question

Economic policy frequently assumes job application bottlenecks stem from monetary expenses (such as phone airtime or transport) or time delays (such as waiting on telephone lines), prompting interventions that subsidize search costs rather than addressing cognitive initiation hurdles.

Participants

N = 7,004 jobseekers (54,135 matches) for callback request experiment; N = 4,423 jobseekers (13,126 matches) for free callback salience experiment in Lahore, Pakistan.

Study Design

Multi-arm RCT comparing main phone call initiation against a free callback reminder treatment and a text-based callback request scheduling treatment that eliminated wait-time differentials.

Results

Free callback salience increased applications by only 0.003 percentage points (1/100th of phone call treatment effect, p = 0.017). Offering text-based callback scheduling to eliminate wait time increased application probability by 0.059 percentage points, which is 1/4th the effect of proactive phone call initiation (p = 0.002).

Takeaway

Prioritize eliminating active step-initiation thresholds over monetary subsidies or minor time-saving tweaks when designing user assistance programs in low-resource environments.

Source and citation

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Plain-English glossary

Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.

Percentage points

The difference between two percentages.

ExampleA rise from 40% to 50% is 10 percentage points. Relative to the starting value, that is a 25% increase.

Office for National Statistics · Percentages ↗Read more about percentage points →
Randomized controlled trial

A study that uses chance, like drawing lots, to decide who receives each option being compared. Researchers compare the groups’ outcomes to estimate the effect of those options.

ExampleA lottery assigns volunteers to a training programme or a comparison group. Researchers then compare their outcomes.

GET-IT glossary · Randomized study ↗Read more about randomized controlled trial →

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