Dietrich Earnhart (University of Kansas): The Effect of Professional Peer Comparisons on Environmental Management: A Field Experiment

Abstract: Peer comparisons combine descriptive and injunctive social norm messages to signal appropriate behavior and induce behavioral change. Studies show that peer comparisons encourage pro-environmental consumer behavior in contexts such as energy use, water use, and recycling. However, mechanisms driving behavioral change surely differ between individuals and organizations, yet no previous study explores the effect of peer comparisons organizational behavior. Our study fills this void by examining the behavior of polluting facilities regulated under the Clean Water Act. Specifically, we conduct a field experiment in order to estimate the effect of peer comparisons on the extent of compliance with discharge limits on the part of municipal wastewater treatment facilities. Using publicly available data on discharge limits and measurements, we calculate each municipal facility’s discharge ratio: the ratio of reported discharge level to permitted level in a given reporting period (e.g., month). For each facility, we then calculate the average discharge ratio for the calendar year of 2016. Based on the distribution of average discharge ratios across the population of municipal facilities, we identify each facility’s place amongst its peers. For our field experiment, in 2017, we sent each facility randomly assigned to the treatment group a certified letter that contrasts its average 2016 discharge ratio to the average ratios of all Kansas municipal facilities. We sent no letter to the control group. While additionally contrasting the control period (prior to delivery of the letters) and the treatment period (after the delivery of the letters), our econometric analysis estimates the treatment effect of professional peer comparisons on a facility’s chosen discharge ratio.