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35-Nicholson Article2
35-Nicholson Article2
Public Administration
Vol 2(1), pp. 1-14
DOI: 10.30636/jbpa.21.35
Research Article
Abstract: Modern reforms meant to incentivize public managers to be more innovative and accepting of risk
are often implicitly based in the longstanding assumption that public employees are more risk averse than
their private sector counterparts. We argue, however, that there is more to learn about the degree to which
public and private managers differ in terms of risk aversion. In order to address this gap, we field a series of
previously validated experiments designed to assess framing effects and status quo bias in a sample of public
and private sector managers. Our results indicate that public managers are not more risk averse or anchored
to the status quo than their private sector counterparts; in fact, the findings suggest the opposite may be true
under some conditions. In addition, our results fail to confirm previous findings in the literature suggesting
that public service motivation is associated with risk aversion. We conclude with a discussion of the
implications of these results for the study of risky choice in the public sector and for modern public
management reforms.
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Nicholson-Crotty et al., 2019
1981) and the status quo bias (Samuelson & participants and the likelihood of unrest. We
Zeckhauser, 1988; Burmeister & Schade, 2007) in a believe these examples point to the need to better
panel of 150 public managers and 150 private understand risk preferences among public
managers. In order to explore the relationship managers and, if we are to argue that incentives or
between public service motivation (PSM) and risk reforms from the private sector will help public
aversion suggested in previous work, we employees make more “innovative” decisions in
additionally assess our experimental findings using these scenarios, to understand differences in risk
previously validated approaches designed to preferences across the sectors.
measure that concept.1 Studies in this area have usually employed a
Our results indicate that public managers are relatively standard definition of risk aversion,
neither systematically more risk averse nor where individuals have a stronger preference for
anchored to the status quo than their private sector avoiding losses, relative to acquiring equivalent
counterparts. In fact, our results provide evidence gains. In other words, risk averse decision makers
that the opposite is sometimes true. The findings faced with a known outcome and an unknown
also support our assertion that important outcome with the potential for a higher payoff, will
components of PSM, such as altruism and choose the former in order to reduce uncertainty in
prosocial motivations, lead to neutral or even the decision making process. The limited set of
positive associations between public service studies that explore the distinct, but related,
motivation and risk tolerance depending on how concept of loss aversion (see for example Salge,
the outcomes of risky choice are framed. We 2011; Nicholson-Crotty et al., 2016) also rely on the
conclude with a discussion of the implications of standard conceptualization that people tend to
these results for the study of risky choice in the have a stronger preference for avoiding losses,
public sector and for modern public management relative to acquiring equivalent gains. We rely on
reforms. these same definitions throughout the remainder of
this study. Yet, this approach remains subject to the
Research on Risk in the Public Sector critique inherent in much of the common wisdom
about public managers—they are more risk averse
Despite the common “wisdom” that public sector than managers in the private sector. Here, we argue
employees are more risk averse than their private that in order to understand how public managers
sector counterparts, the body of work that respond to risk requires understanding both risk
empirically examines risk-taking by public tolerance and an individual’s orientation to status quo
managers and employees, is surprisingly small. decisions.
Before reviewing the literature, it is important to Generally speaking, scholars have suggested
note that numerous decisions made by public that public sector actors are more risk averse than
managers in various government settings are likely their private sector counterparts. Studies using self-
influenced by their orientation towards risk. For reported risk tolerance find that public sector
managers at the federal level, we can think of employees score significantly lower than private
choices about the adoption of employee sector employees (Hartog et al., 2002; Guiso &
engagement practices despite added costs and an Paiella, 2008). In a study of public and private
unclear timeline for payoff of such results. At the sector employees in the Netherlands, Buurman et
state level, risk tolerance will likely influence the al. (2012) provide experimental evidence that the
decision to increase regulation of daycare facilities former (public) are more risk averse than the latter
despite certainty about pushback from some (private). These authors find that this is particularly
stakeholders and uncertainty about the future true among those with higher public service
probability of an injury to a child. In a more motivation.
mundane example, state actors may consider the A series of studies have suggested that risk-
adoption of new case management software despite aversion may not only arise from the conditions of
uncertainty about the impact on average benefits or public sector employment, but also be a predictor
case processing speed. Locally, a mayor or city of selecting into government. Indeed, the largest
manager, might need to decide how to allocate body of work on cross-sectoral risk preferences has
police resources for a permitted demonstration, focused on questions of employment selection.
despite uncertainty about the number of This work has shown public sector employees have
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Journal of Behavioral Public Administration, 2(1)
a stronger preference for job security than private performance and the willingness to take risks. Most
sector employees (Houston, 2000) and that job of these draw heavily on the behavioral theory of
security does more to draw people to public sector the firm (Cyert & March, 1963), suggesting that
employment than other “intrinsic” rewards (Lewis organizations are more willing to look for
& Frank, 2002). Similarly, Luechinger, Stutzer, & innovative or new solutions when performance
Winkelmann (2007) find that sector selection on falls below target levels. Salge (2011) finds that, in
unobservable factors is reduced after controlling a sample of English hospitals, performance
for preferences towards risk taking. The authors feedback is correlated with innovativeness. At the
explain this finding by suggesting that public sector individual level, Nielsen (2014) finds that negative
jobs have higher security and that risk averse performance information induces Danish school
persons prefer that security over the wage premium principals to reorder the multiple goals that their
in private sector jobs (Bellante & Link, 1981). In organizations are asked to pursue, emphasizing
related work, Fuchs-Schündeln and Schündeln areas in which they are doing particularly poorly.
(2005) show that risk aversion explains why risk- Meier et al. (2015) build a theory that imagines
averse people are more likely to work in low-risk performance as a key driver of decision making by
occupations. Finally, in recent work utilizing an public managers. Specifically, the authors take a
experimental approach, Pfeifer (2011) confirms Bayesian approach in which the distance between
that risk averse individuals are more likely to select current performance and the manager’s prior
into government and demand a higher wage regarding acceptable performance shapes the
premium to accept the insecurity of private sector choices they make regarding prospector
employment. (aggressive) versus defender (protectionist)
It is important to note, however, another body strategies. Finally, Nicholson-Crotty et al. (2016)
of work has challenged the correlation between risk show that performance relative to a predefined
aversion and government employment. Through a reference point is a significant predictor of
review of risk taking in scholarly studies, Bozeman innovation and other risk-taking behavior in public
and Kingsley (1998) suggest that there is little sector organizations. These studies suggest that
difference in risk aversion across the sectors. public sector risk preferences may be accurately
Similarly, studies using stated preferences about job described by prospect theory. They are, however,
security find limited evidence regarding differences primarily observational and often focused at the
among the sectors (see e.g. Rainey, 1982, Crewson, organizational level and, thus, limited in their ability
1997, and Lewis & Frank, 2002). to tell us about risky choice by individuals in the
Several studies have also sought to understand public sector.
the conditions under which public employees might A recent study in this area compares risky
take greater risks. These have demonstrated that choice across the sectors using a traditional
hierarchy and red tape are negatively correlated compound lottery game to test if there are different
with risk-taking among public managers, while levels of risk tolerance among those preparing to
employee-supervisor trust is positively associated work in the public versus the private sector. Tepe
(Turaga & Bozeman, 2005; Nyhan, 2000). Morris and Prokop (2018) find that, while MPA students
and Jones (1999) find that entrepreneurship in report being more risk averse, their choices in the
public organizations, including risk-taking experimental setting are not significantly different
behavior, is often a strategic response to than those of MBA or Law students; though they
environmental turbulence. Studies have shown that find that the former take longer to make those
the attitude of senior management towards change choices. Finally, the authors find that self-reported
and risk taking is a good predictor of innovative public service motivation is correlated with risk
behavior in public organizations (Damanpour, averse choices in the lottery game.
1991; Vigoda-Gadot & Kapun, 2005; Vigoda- The Tepe and Prokop paper represents a
Gadot, 2009). The UK government has found that significant step forward in a literature that has
clear performance targets linked to sanctions or already produced important insights into our
rewards may induce more risk-taking among public understanding of risky choice among public
employees and managers (NAO, 2006). managers. However, it also leaves open a number
Very recently, a small handful of studies have of opportunities for additional research. As one
also sought to understand the relationship between example of these opportunities, we still do not
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Nicholson-Crotty et al., 2019
know if actual public and private managers differ in demonstrated, however, that decision makers are
their tolerance for risky alternatives. Tepe and consistently more risk seeking when presented with
Prokop make clever use of professional students as an outcome framed as a loss relative to an
a proxy for actual decision makers, but research equivalent outcome framed as a gain (see
from other fields, such as international relations, Kühberger, 1998 for a review). In the initial
suggests that students sometimes make very experiment to investigate adherence to the axiom,
different decisions in experimental settings relative Tversky and Kahneman (1985) asked decision
to trained professionals (Mintz, Redd, & Vedlitz, makers to select a course of action to combat a
2006). Additionally, Tepe and Prokop, along with disease that will take 600 lives if nothing is done.
much of the other literature on risk tolerance across They demonstrate that preferences are risk averse
the sectors, depend heavily on expected utility when subjects are given a choice between a 100%
theory (EU), which assumes that levels of risk chance to save 200 lives versus a 1/3 probability of
aversion are fixed in individuals. This approach saving 600 lives and a 2/3 probability of saving
ignores important insights from psychology, which none. Alternatively, preferences are risk seeking
suggest many individuals regularly violate the tenets when subjects are given the choice between a 100%
of EU and that risk tolerance is asymmetric within chance of 400 people dying versus a 1/3 chance that
individuals. It is also dependent on framing, nobody will die and a 2/3 chance that all 600 will
perceived position relative to some reference point, die. The “Asian Disease Problem” study and the
and loss aversion (see Kahneman, Knetsch & framing effect that it uncovers have been widely
Thaler, 1991). Thus, this study fits into the growing replicated and validated.2
literature on behavioral public administration
(BPA). Status quo bias
The status quo bias is a widely observed
Framing Effects and Status Quo Bias in phenomenon where decision makers exhibit a
the Pubic vs. the Private Sector strong preference for the current state of affairs
(Samuelson & Zeckhauser, 1988; Burmeister &
One aim of the BPA School is to understand the Schade, 2007; Nicolle et al., 2011). Like framing
psychological foundations of bureaucratic decision effects, the preference is closely related to the more
making. In order to address the second issue raised general phenomenon of loss aversion, where a
in the last paragraph (i.e., potential violations of potential loss relative to a predetermined reference
expected utility theory), we draw on work which point is weighted more heavily than a potential
examines framing effects and status quo bias in gain. In this case, the potential disadvantages of
public and private sector decision makers. changing the current state of affairs loom larger
Specifically, we explore whether these actors than the potential advantages for most decision
exhibit different deviations from EU when loss makers. Research suggests that this is due in part to
aversion, or the tendency to overweight losses the fact that decision makers have higher certainty
relative to equivalent gains, is activated through regarding outcomes of the status quo prospect (See
different decision frames or through the Martin, 2017; Weyman & Barnett, 2016).
establishment of the status quo as a reference point.
We focus on these two areas to search for Public service motivation and risk preference
differences across the sectors because each has Before moving to experimental tests of differences
significant implications for the ways in which in risk preference, framing effects, and status quo
decision makers respond to reforms designed to bias among public and private managers, it is
incentivize increased risk taking. important to discuss why we should expect any
differences to exist. The fact that human beings
Framing effects regularly violate the axioms of expected utility
Framing effects occur because of a systematic theory has been demonstrated across a wide variety
violation of the invariance axiom under EU. This of subjects and scenarios (see Kahneman et al.,
axiom suggests that decision makers should be 1991); so, if we are going to hypothesize unique
indifferent to equivalent choices regardless of effects for government employees, we need to
whether outcomes are framed positively or identify some way in which these individuals are
negatively. Considerable research has
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Journal of Behavioral Public Administration, 2(1)
systematically different from the remainder of remain complimentary (see Perry & Hondeghem,
society. 2008a).
One of the key dimensions of uniqueness The relationship between altruism and PSM is
identified by scholars is what has come to be called particularly important. Research suggests that
“Public Service Motivation.” Broadly speaking, it is altruism can significantly increase loss aversion
a concept used to explain the selection and when people make choices that affect the welfare
persistence of employees into public sector jobs of others (Crockett et al., 2014). More specifically,
despite lower extrinsic rewards relative to the higher levels of altruism make people even more
private sector. Originally defined as “predisposition risk seeking when choosing among outcomes framed
to respond to motives grounded primarily or as a loss for others. This may mean that previous
uniquely in public institutions and organizations” studies which examined the relationship between
(Perry & Wise, 1990, p. 368), the definition of PSM PSM and risk aversion arising in the context of an
has expanded to include “the beliefs, values and individual monetary payoff (e.g. a lottery game)
attitudes that go beyond self-interest and may have missed an important component of this
organizational interest, that concern the interest of relationship. More specifically, it implies that public
a larger political entity and that motivate individuals sector actors, who generally have higher levels of
to act accordingly whenever appropriate” PSM, may in fact be more risk seeking than their
(Vandenabeele, 2007, p. 547). private sector counterparts when making decisions
Two studies have found that public service that could harm others.
motivation, which is consistently found to be We can turn now to another foundational
higher in public sector workers, is associated with concept of PSM, prosocial behavior. As noted
risk averse choices (Buurman et al., 2012; Tepe & above, contemporary descriptions rest heavily on
Prokop, 2018), but we suggest that significant concepts of acting for the benefit of others or of
questions regarding the relationship between PSM society as a whole. For example, Wright and Pandey
and risky choice remain unanswered. This is (2008, p. 503) conceive of public service motivation
because the literature to date has not sufficiently “as work-related values or reward preference such
explored the reasons why PSM should influence risk as the employees’ desire to help others, benefit
tolerance or the conditions under which that society, or engage in meaningful public service.”
influence should be most apparent. While this Similarly, scholars suggest that PSM is a “specific
represents an early step in this direction, we believe expression of prosocial, other-oriented motives,
there is considerable room to explore this topic and goals and values” (Perry & Hondeghem, 2008b, p.
develop our understanding of the PSM-risk 295) or “a mix of motives that drives an individual
relationship. to engage in an act that benefits society” (Taylor,
In order to close this gap, we focus on 2 2007, p. 934). It is important to note, however, that
foundational elements of PSM identified by in the context of PSM, these prosocial motives are
scholars in order to develop expectations that, often assumed to be activated by the nature of
under certain choice scenarios, higher public government work or the characteristics of public
service motivation will lead to higher, rather than institutions (see for example Ritz, 2009).
lower risk tolerance. The first of these is the closely Previous work found a negative correlation
related concept of altruism. Some define PSM as a between public service motivation and the
“general, altruistic motivation to serve the interests willingness to take risks in return for an individual
of a community of people, a state, a nation or monetary payoff. We suggest that the prosocial
humankind” (Rainey & Steinbauer, 1999) and motivations associated with PSM may influence
numerous studies have identified generalized risk tolerance differently when the payoffs for risk
altruism as an important component of PSM (see taking are framed as benefits for others, rather than
Perry, Hondeghem, & Wise, 2010; Brænder & the individual.
Andersen, 2013; Brewer, Ritz, & Vandenabeele,
2012; Bright, 2008; Pandey, Wright, & Moynihan, Subjects and Experiments
2008). Not surprisingly, scholars seeking to identify
PSM as a unique theoretical construct have sought In order to test these expectations, we conduct a set
to distinguish it from simple altruism (see Perry, of experiments to detect framing effects and a
2014), but even in these accounts the two concepts
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Nicholson-Crotty et al., 2019
status quo bias and also collect information on To test framing effects, we use the classic Asian
Public Service Motivation in a sample of 150 public Disease Problem (ADP) developed by Kahneman
and 150 private sector managers. Subjects come and Tversky. Specifically, subjects are asked to:
from a Qualtrics panel collected during May of
2017. We recruited respondents directly through “Imagine that the U.S. is preparing for the
Qualtrics to avoid some of the potential pitfalls of outbreak of an unusual disease, which is
using other online survey platforms (Stritch et al., expected to kill 600 people if nothing is done.
2017). With the stipulation that respondents were Two alternative programs to combat the disease
managers in their organization, all were initially have been proposed. Assume that the exact
targeted by a partner of Qualtrics through self- scientific estimate of the consequences of the
reporting. Subjects were then screened to remove programs are as follows:”
misidentified respondents using red-herrings and
other techniques to ensure sample accuracy. In the first condition, subjects are asked to choose
Subjects were screened one last time regarding between Program A which will save 200 people and
sector, experience, and responsibilities at the Program B in which there is a 1/3 probability that
beginning of the survey to remove individuals 600 people will be saved, and 2/3 probability that
whose answers did not match responses from no people will be saved. In Condition 2, subjects
previous screenings.3 Individuals in the nonprofit are told that if Program A is adopted, 400 people
sector are not included in the sample. This panel will die, while if Program B is adopted, there is a
helps us address another potential shortcoming in 1/3 probability that nobody will die, and 2/3
recent scholarship, namely the reliance on probability that 600 people will die. The
professional students rather than actual managers. probabilistic outcome is the riskier choice. Years
On average, our sample is 46 years of age, with of validation of the original experiment suggest that
more than 25 years in the workforce and more than subjects will be more likely to choose that outcome
10 years in their current positions. The median when presented with the negative, or lives lost,
respondent manages between 100 and 249 people. frame.
Almost 1/3 of subjects are responsible for more
than 1000 employees. In other words, these are Status quo
experienced managers and that is the group to To test for status quo bias, we use two
which we can most safely draw inference from the experiments4, both of which are slight variants of
results of this study. Approximately, 64% of the experiments developed by Burmeister and Schade
sample have at least a bachelor’s degree, and 29% (2007). Their earlier experiments were designed to
completed post graduate work. The sample is test for differences in status quo bias between
roughly divided between men and women. All entrepreneurs and other business professionals.
subjects work in organizations based in the United Those experiments were themselves heavily
States. modeled on the original status quo bias
Subjects were randomly sorted into different experiments developed by Samuelson and
conditions for all manipulations described below. Zeckhauser. In the first experiment, subjects are
We also randomize the presentation of experiments presented with a vignette that reads:
to subjects in order to avoid ordering effects.
Transue and colleagues (2009) suggested “Your unit has issued an RFP for the collection
randomizing the order of experiments “prevents and analysis of data on regulatory impact and
experiments from systematically affecting each compliance. This a competitive bid and you will
other by distributing whatever influences that award the contract to the proposal with the
might exist”. The descriptive statistics from the most attractive offer. You have the capacity to
randomizations are presented in Appendix, Tables do the analysis on your own, but it would cost
1 and 2. These tests confirm that there do not exist you about $10,000 and take about 1 month to
significant differences on key variables of interest complete. As it turns out, you have worked
across control and treatment groups in any of the with all three groups that submit a proposal
experiments. before, so you can derive probabilities for how
likely they are to complete the work on the
Framing effects promised date. Which proposal will you accept?
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Journal of Behavioral Public Administration, 2(1)
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Nicholson-Crotty et al., 2019
4 significant factors representing attraction to rather than a gain. As noted above, this is consistent
policy making, commitment to public interest, with decades of research on loss aversion. Because
compassion, and self-sacrifice. We use the score the response variable is dichotomous, tests of
which retains these four factors as our PSM significance between individual proportions were
measure in subsequent analysis. conducted by predicting program choice with the 4
treatment indicators in a logistic regression,
Results calculating the margins of those predictions, and
then conducting pairwise comparisons of those
margins with a Bonferroni correction.8 Significant
Table 1
Framing Experiment (percent choosing alternative by group)
Group
Private Public Private Public
Choice Negative Negative Positive Positive
Deterministic 36.49 23.38 72.37 75.68
Probabilistic 63.51 76.62* 27.63 24.32
Chi2= 61.6409, Pr = 0.000, for the overall table. Significant differences between the negative and positive
frame are designated with shading. Significant differences across sector within each frame are designated with
asterisks.
8
Journal of Behavioral Public Administration, 2(1)
counter parts (.19 vs. -.20, p<.05). Next we can comparisons are between the boxed status quo
note that there was no significant difference in the proportions and other cells. Previous work on
PSM score among those who chose the status quo bias suggests the need to compare status
probabilistic vs. the certain outcome in the positive quo choice proportions to both the proportion of
frame (.04 vs. -.03, p<.45). However, the mean subjects that chose an outcome despite receiving a
level of PSM was significantly higher in the group neutral treatment and to the proportion of subjects
that chose the risky alternative when outcomes that chose the outcome despite receiving an
were framed negatively, or as a loss of life (.10 vs. - alternative status quo treatment (Burmeister &
.18, p<.05). Taken together, these relationships Schade, 2007). We again calculate the significance
suggest that 1) public managers have higher levels of these comparisons by regressing treatment
of PSM than managers from the private sector and group indicators on subject choices, and then
2) there is an association between PSM and computing pairwise comparisons of the margins
differential response to framing effects across from this estimation with a Bonferroni correction.
Table 2
Status Quo Bias, Experiment A (percent choosing alternative by group)
Group
Private Public Private Public Private Public Private Public
Choice Neutral Neutral 15% 15% 20% 20% 25% 25%
15%
76.32 92.31 90.63* 67.44 68.57 62.16 73.33 46.88
Savings
20%
23.68 5.13 6.25 16.28 28.57* 35.14* 17.78 37.5
Savings
25%
0 2.56 3.13 16.28 2.86 2.7 8.89* 15.63*
Savings
Note: Pearson chi2 = 40.7549 Pr = 0.000, for the overall table. Boxed cells indicate status quo condition. Asterisk
denotes if the status quo proportion is significantly higher than the neutral treatment; shading denotes if it is
significantly different from alternative status quo proportions.
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Nicholson-Crotty et al., 2019
The results of the second status quo These results are not consistent with findings from
experiment, presented in Table 3, are even less previous studies suggesting that PSM is associated
supportive of the assertion that public managers are with greater risk aversion (see Buurman et al., 2012;
more wed to the status quo than their private sector Tepe & Prokop, 2018). In order to see if that
counterparts. In this case, the rows represent the finding generalizes to this context, and if we are
choice of software package A, B, or C. seeing lower status quo bias in public managers in
The Columns represent the treatments by spite of an association between PSM and the risk
sector of respondent. So, Columns 1 and 2 are averse choice, we can once again examine PSM
subjects from the private and public sectors across groups. Limiting the subject pool to those
respectively that received the neutral (control) who received some status quo prompt and then
treatment. Columns 3, 5 and 7 contain responses comparing subjects who stayed with the status quo
from private managers who received the Package they were presented versus those that made some
A, B, or C status quo treatment respectively; and other choice, we see no significant difference in
Columns 4, 6, and 8 contain public sector public service motivation in either experiment (.02
responses for the various treatments. The cells that vs. -.06, p<.73 for the contract choice experiment;
are boxed in each row represent the status quo -.06 vs. -.01, p<.25 for the software choice
Table 3
Status Quo Bias, Experiment B (percent choosing alternative by group)
Group
Private Public Private Public Private Public Private Public
Choice
Neutral Neutral A A B B C C
Package A 78.05 57.58 68.29 50 60 67.44 63.16 54.05
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Journal of Behavioral Public Administration, 2(1)
managers to be more accepting of innovation and out of the inaccurate assumption that public
risk. The efficacy of, and even the need for, reforms managers and employees are inherently more risk
that incentivize greater risk tolerance among public averse than their private sector counterparts.
sector employees depends on an accurate Previous experimental work where the payoff of
understanding of risky choice in that sector. risky choices went to the individual subject has
In order to address this gap, this study fields a supported this common “wisdom” about risk and
series of previously validated experiments designed public service. Alternatively, our study, which
to assess framing effects and status quo bias in a frames the benefits of decisions in terms of public
panel of professional public and private sector values such as efficiency or the protection of life,
managers. First, and most importantly, the results suggests that public managers are not consistently
do not suggest that public managers are more risk averse than those in the private sector.
consistently more risk averse than their private Indeed, it indicates that under certain conditions,
sector counter parts. Indeed, when outcomes are they may be more risk seeking. This accords well
framed as losses, subjects from the public sector are with work on public service motivation, which
considerably more risk tolerant in their selection of finds that PSM is most correlated with
programs. Similarly, we do not find evidence that organizational performance and organizational
public managers are more anchored to the status citizenship behavior when organizations create
quo than their private counter parts. In fact, the incentives that align employee predispositions with
opposite may be true in this pool of subjects as organizational mission (Paarlberg, Perry &
private managers more regularly chose the status Hondeghem, 2008), and help employees to
quo option relative to their public sector understand they are doing something useful for
counterparts. Though as noted above, we society as an intrinsic reward (Kim, 2006).
encourage caution in the interpretation of the status While we think these findings can contribute to our
quo bias results because of our relatively limited understanding of risk in the public sector, we also
sample size and the challenges of interpreting null recognize that the study has a number of
findings. limitations. While we have attempted to make our
Our results also do not support recent experiments reflect actual decisions that public
findings that public service motivation is associated managers make, they obviously do not mimic those
with risk aversion (see Buurman et al., 2012; Tepe decisions perfectly or for every subject and, thus,
& Prokop, 2018). Based on those findings, we legitimate questions of external validity remain.
would expect public managers to exhibit greater Future studies will work to tailor manipulations
status quo bias, but as noted above, that is not what more closely to the choices faced by public
we find. A deeper investigation reveals that, while employees by focusing on specific organizations
public managers do have higher levels of PSM than (e.g. police, teachers, etc.) and/or particular
their private sector counterparts, those differences functions (e.g. budgetary, case worker, etc.) and
did not correlate with status quo bias. We found no designing experiments specifically for those groups.
significant differences in the levels of PSM between
those that made the status quo, or risk averse, Notes
choice and those that chose a more uncertain
alternative. The results of the framing experiment 1. Before fielding the instrument with actual
similarly fail to support the assertion that PSM is managers from the two sectors, we tested the
related to risk aversion. In that case, we actually experimental manipulations and the predictive
hypothesized that due to its foundation of altruism, power of the PSM scale in a sample of
PSM would correlate positively with risk seeking respondents drawn from Prolific, a new service
behavior when subjects were faced with a loss of similar to Amazon’s Mechanical Turk.
life as the outcome. Consistent with that 2. Though see Chui (2003) for evidence that
expectation, we find that among those who framing effect revealed by the Asian Disease
received the negative frame, PSM was significantly Problem can be sensitive to the scale presented
higher among the group that selected the riskier to subjects and Li and Xie’s (2006) “equate-to-
program. differentiate” model for an alternative
Our results suggest that the perceived need to explanation of the result.
incentivize risk taking in the public sector may grow
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Nicholson-Crotty et al., 2019
3. 443 people started the survey, and 100 of these 8. The code in STATA to replicate this post-hoc
were removed by Qualtrics in this final screen test is: logit choice treatmentn…k ; margins treatment,
because they did not meet our criteria. pwcompare(effects) mcompare(bonferroni)
4. We are essentially replicating previously 9. We follow the arguments of Goodman and
published experiments in a different set of Berlin (1994), Levine & Ensom (2012), and
subjects. As such, we accepted the O’Keefe (2007) who suggest avoiding the use
experimental design of these experiments. of post-hoc power analysis and instead use
including perceived utility equivalence of status common statistical techniques. For this
quo options and other factors. reason, we believe our use of chi-square tests
5. It is true that all managers in our sample have and logistic regression to calculate confidence
likely not faced decisions exactly like that intervals around response proportions are
presented in the Asian disease problem. But, appropriate means to assess the relationships
because of their experience level, they likely of interest. We acknowledge, however, that
have made decisions about the course of their statistical tests do not completely address the
organizations that are consequential for those concern in this case because we are, in fact,
inside and outside of that organization. expecting a null result. In other words, the
Therefore, borrowing from work on political smaller N dictated by our desire to use actual
psychology, we can consider professional public managers may be large enough to detect
managers from both the public and private status quo bias but not large enough to
sector as “sophisticates” when it comes to confidently say that a lack of observed
these types of decisions. As such, the ADP may difference between public and private
be a more valid measure of their susceptibility managers is not a type 2 error. It is important
to framing effects than it is for other less to note, however, that the direction of the
sophisticated decision makers that have made findings offer no suggestion of a pattern of
up samples in numerous other studies even if greater status quo bias among public managers.
our managers have not faced this exact In fact, even in cases where the differences
scenario in their careers. between the sectors are not statistically
6. All questions are listed in the Appendix significant, a consistently lower proportion of
7. In order to make the table easier to read, we public subjects chose the status quo option
present only percentage of responses in each relative to their private sector counterparts. In
cell, rather than the frequencies. other words, we are not simply relying on
limited power to misleadingly suggest a lack of
statistical difference between these groups.
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Appendix
PSM1: I am interested in making public programs that are beneficial for my country or the
community I belong to.
PSM2: Sharing my views on public policies with others is attractive to me.
PSM3: Seeing people get benefits from the public program I have been deeply involved in
brings me a great deal of satisfaction.
PSM4: I consider public service my civic duty.
PSM5: Meaningful public service is very important to me.
PSM6: I would prefer seeing public officials do what is best for the whole community even
if it harmed my interests.
PSM7: It is difficult for me to contain my feelings when I see people in distress.
PSM8: I am often reminded by daily events how dependent we are on one another.
PSM9: I feel sympathetic to the plight of the underprivileged.
PSM10: Making a difference in society means more to me than personal achievements.
PSM11: I am prepared to make enormous sacrifices for the good of society.
PSM12: I believe in putting duty before self.
15