In this information-provision experiment, all individuals receive a signal about a particular variable (cost of living or relative income), but we randomize between one of two signals that they may receive. Then, we can compare the behavior of individuals who, by chance, received a higher signal about a specific variable (e.g., showing a signal that the cost of living is 10% higher than the U.S. average versus showing that same individual a signal that the cost of living is 5% higher than the U.S. average). To do this in a non-deceptive fashion, we computed the statistics shown to the subjects using two alternative data sources, both of them valid, and we cross-randomized which of the two sources were shown to each individual.
Immediately after respondents provided their prior beliefs on both earnings rank and cost of living, they were shown two messages: one page with statistics about the cost of living in the two cities being considered and a second page with statistics about the earnings rank in each of the two cities. The following message is a sample of the feedback page for cost of living: “Los Angeles- Long Beach-Anaheim, CA metro area is 17.0% more expensive than the U.S. average. The Champaign-Urbana, IL metro area is 6.6% cheaper than the U.S. average.” The following message is a sample of the feedback page for earnings rank: “With your individual annual earnings of $54,000, you would be richer than 57.9% of Los Angeles-Long Beach-Anaheim, CA’s population. With your individual annual earnings of $54,000, you would be richer than 60.3% of Champaign-Urbana, IL’s population.” In both of these feedback pages, individuals were asked to take a moment to review the information carefully and were alerted that the information was only going to be shown once. We did not allow respondents to continue to the next page until at least 10 seconds had elapsed.
The sources were randomized between individuals; that is, we used the same cost of living source for the two cities being considered by each individual, and the same earnings data source for the two cities. As a result, individuals were randomly assigned to one of four treatment groups. For cost of living estimates, the two sources used were the Regional Price Parity (RPP) data by the Bureau of Economic Analysis and the Cost of Living Index (COLI) data compiled by the Council for Community and Economic Research. For the earnings rank feedback, the two sources used were the American Community Survey (ACS) and the Current Population Survey (CPS), both conducted by the U.S. Census Bureau. Therefore, the four information treatment groups were: (RPP, ACS), (RPP, CPS), (COLI, ACS), (COLI, CPS).
Individuals were debriefed in the feedback messages on the name of the source of the information that they received.