Money Talks: The Effects of Monetary Incentives on Earnings Non-Response in the SIPP

Abstract

The Survey of Income and Program Participation (SIPP) has a history of using conditional and discretionary monetary incentives to induce survey responses. While incentives have been effective in increasing unit response, little is known about their effect on item response. This paper exploits a multi-wave random monetary incentive experiment for the SIPP 2014 panel to examine the effect of incentives on earnings non-response. We show that individuals in incentive-receiving households have a 1.3-percentage-point lower earnings non-response rate than those in non-incentive households. This effect is robust to controls for observed and unobserved individual heterogeneity and non-random panel attrition in a correlated random effects specification. Further, we find the effect is driven by a $40 incentive assignment and not the $20 incentive. Consistent with theories linking unit and item non-response, we find that contemporaneous earnings non-response is associated with a higher probability of attrition in the following wave, but the $40 incentive mitigates this relationship.

Keywords: SIPP, earnings non-response, monetary incentives, unit response, attrition, experiment

JEL Classification: C82, C83