Diffusion of Compliance in Neighborhood Networks

By Francescos Drago, Friederike Mengel and Christian Traxler

Measures that induce people to comply with laws can encourage others in their neighborhood to comply, even if they are not targeted directly, according to research by BCCP Senior Fellow  Christian Traxler (Hertie School of Governance) and co-authors Francescos Drago (University of Messina) and Friederike Mengel (University of Essex). The project sheds light on an important issue for policymakers – how to maximize the impact of enforcement measures.

The research builds upon a randomized trial that sent different types of mailings to potential evaders of TV license fees in Austria. While earlier work examines the direct effects of these mailings, the current study uses much richer data, involving over 500,000 households from rural Austria. The data allows the researchers to observe if and how “untreated” households changed their compliance behavior in response to enforcement mailings sent to their neighbors. More specifically, the authors examine whether, and under which circumstances, the mailings spurred non-recipients to comply.

The results indicate that untreated households were indeed responsive. The mailings made nearby cheaters more likely to switch from evasion to compliance. While these indirect effects were small at the individual level, they added up to a sizable number. In fact, the overall spillover was similar to the size of the direct effect of the mailing campaign.

The study also analyzes how the geographic structure of neighborhood networks – which shapes communication – influences the spillover effects. It looks at which households are “best targeted” (depending on their position within a network) to maximize spillover effects, and whether these effects are larger when treatments are widely spread or locally concentrated within nearby neighbors. The results indicate that targeting highly “diffusion central” households is a good idea, while local treatment concentration is bad as it leads to lower treatment spillovers. These later findings also might be relevant for other applications (such as marketing campaigns, the spread of technological innovation, etc.) where communication among neighbors spurs indirect effects.

The full paper “Compliance Behavior in Networks: Evidence from a Field Experiment” is forthcoming in the American Economic Journal: Applied Economics. An ungated working paper version is available here.