Nudges and compensation: Evaluating experimental evidence on controlling rice straw burning

Abstract

The customary occurrence of crop residue burning substantially increases air pollution. We examine the effects of nudges and cash compensation in curbing this practice using a field experiment in the rice-growing region of northern India. Information treatments include positively-framed and negatively-framed social norms and environmental awareness nudges. We identify the effects of information with and without cash transfers for manifestly avoiding residue burning. We show that cash compensation and two types of nudges – positively-framed social norms and environmental awareness – significantly reduce residue burning. We observe a stronger impact from cash compensation than nudges, and that these effects complement each other. Policymakers should take advantage of the complementarity between these interventions, particularly when low-cost informational nudges can potentially reduce environmentally harmful practices. This paper adds to the narrative on information framing effects in field experiments and discusses how nudges and extrinsic incentives could augment each other in public good contributions.