This episode delves into the work of Good Business Lab (GBL), co-founded by Professor Achyuta Adhvaryu. GBL focuses on innovative workplace interventions to improve worker well-being and firm productivity, and it typically evaluates these interventions using Randomized Controlled Trials (RCTs). Show host Gene Tunny and Ach discuss the effectiveness of soft skills training programs and the importance of worker voice in creating a more engaged and productive workforce. They discuss methodological issues regarding RCTs and whether the Hawthorne effect is a concern. Ach is Tata Chancellor’s Professor of Economics and Director of the 21st Century India Center at UC San Diego.
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About this episode’s guest: Professor Achyuta Adhvaryu
Achyuta Adhvaryu is the Tata Chancellor’s Professor of Economics at the School of Global Policy and Strategy and is the inaugural director of the 21st Century India Center at UC San Diego. Adhvaryu’s research interests are in development economics, organizational economics and health economics, and his experience in organizational development make him well-suited to lead our new center. Prior to this role, Adhvaryu was a professor at the University of Michigan and an assistant professor at the Yale School of Public Health.
https://gps.ucsd.edu/faculty-directory/achyuta-adhvaryu.html
What’s covered in EP251
- Introduction. (0:00)
- Achyuta’s Early Career and Research in East Africa (1:53)
- Historical Examples of Private Sector Impact (17:03)
- Good Business Lab’s Approach and Findings (21:45)
- Methodology and Measurement of Impact (37:56)
- Hawthorne Effect and Replication of Findings (43:33)
- Economic Development and Convergence (49:44)
Takeaways
- Soft skills training can significantly improve productivity, even in blue-collar settings.
- Worker voice, when effectively harnessed, can reduce turnover and absenteeism while boosting productivity.
- Good Business Lab demonstrates the practical value of academic research when applied to real-world business challenges.
- A growing body of evidence supports the integration of worker wellbeing initiatives into business strategies globally.
Links relevant to the conversation
Good Business Lab:
UC San Diego 21st Century India Center that Ach directs:
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Transcript: From Academia to Impact: Transforming Workplaces w/ Achyuta Adhvaryu, Good Business Lab – EP251
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Achyuta Adhvaryu 00:03
You know, Morton Salt did this purely through competitive forces. They wanted to stay in business again. They said, Hey, we better get on board with this thing. And it turns out, you know, they were able to solve a huge public health issue.
Gene Tunny 00:22
Welcome, to the economics explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode. Please check out the show notes for relevant information. Now on to the show. Hello and welcome to the show. This episode features a conversation with Professor Arch advaio from University of California San Diego arch is the co founder of good business lab, a non profit dedicated to improving worker welfare and firm productivity through innovative interventions. According to the lab’s website, worker well being is good business. We believe that building the business case to support better conditions for workers is the most sustainable way to transform labor markets and enable everyone to reach their economic potential and live a dignified life. Hutch shares his fascinating journey from his early work in East Africa studying healthcare delivery to his current focus on leveraging the private sector to drive positive change. He discusses the lab’s groundbreaking findings, such as the significant productivity gains from soft skills training for garment workers and the importance of empowering workers through improving worker voice, the ability of workers to communicate issues and concerns to management. This conversation offers valuable insights at an intersection of academic research, business practices and economic development. Join us as we explore how arch and his team are bridging the gap between theory and practice to create meaningful impact. One of the highlights for me in this conversation was how arch explained how his interest in economic development was stimulated by his work in East Africa, and that came about because he followed his girlfriend, who later became his wife, to the region. It’s a story that appeals to the romantic in all of us. Thanks to Lumo coffee for sponsoring this episode. This grade one organic specialty coffee from the highlands of Peru is jam packed full of healthy antioxidants. There’s a 10% discount for economics explored listeners. Details are in the show notes, as always, I’d be interested in your thoughts on this episode or others, and any ideas you have for future guests or how I can improve the show. My contact details are in the show notes. Okay, without further ado, let’s dive into the episode. I hope you enjoy it. Arch Welcome to the program.
Achyuta Adhvaryu 03:00
Nice to be here. Thanks for having me on
Gene Tunny 03:03
terrific I’m keen to learn about all the good work that you’re doing with good business lab. Before that, I’m interested in what’s your story in terms of getting to setting up the good business lab with your with your co founders, you did a PhD in Economics from Yale. Could you tell us a bit about what you studied and what led you to this work you’re doing with the good business lab, please?
Achyuta Adhvaryu 03:32
Yeah, sure, that’d be great. So I’m an economist. You know, I have never had a real job in my life. I think been, you know, college student, I went straight to grad school. They went straight to faculty jobs and and, you know, part of that pathway has always been, you know, yearning on my end to not only have impact in the academic sphere and generating knowledge and, you know, producing things that are consumed by the academic, you know, world, but also, kind of having some of my work influence policy making, influence or decisions on the ground and influence people’s lives. That was always the goal, getting into the PhD. And I realized pretty early on, when I was in graduate school and as a junior faculty as an economist, that while we often research things that are, you know, very adjacent to the real world, the sort of esoteric nature of academia and the kind of, you know, way that the knowledge production industry is structured, we’re almost encouraged not to be, you know, get our hands too dirty in the real world. Yeah. So I’ve had. You know, mentors and professors tell me, you know, don’t bother with all this policy stuff. You know, I think if your stuff gets picked up by the policy making world, that’s great, but if not, you know, that’s not what you’re here to do. We’re very strictly sort of trying to push out the knowledge frontier. And I sort of didn’t agree with that notion. And I think actually, I’m, you know, I’m not the only one who felt this way. And one kind of academic generation before me, you know, folks like Esther Duflo and Abhijit Banerjee and Michael Kramer and several others were were kind of forging this path of having one foot in academia and doing really rigorous work that’s informed by the kind of cutting edge, you know, of academic work, but also having a foot in the policy world and dedicating a lot of time and resources towards advancing, you know, policy goals. And in this case, I came to economics with a with a deep desire to impact the lives of of low income populations around the world, much like I think Esther and Abhijit and others. And I think that that journey began actually in East Africa, and a lot of my early work was around healthcare delivery to poor populations. Like, how do you sort of make that more efficient and more universally accessible, especially in kind of remote rural areas where there’s not very much healthcare access. So I was working in that space in Tanzania and Kenya and Uganda and a few other places for the first part of my career. But I think I always acknowledged that at the core of a lot of the stuff that we do as economists, there is a private sector role. So it’s not just about government delivery of policy, of policy, you know, and resources to the poor, while that is a big part of, you know, the safety net and always will be, I felt that there was an under emphasis on understanding the role of the private sector. How could the private sector be involved in delivering, you know, welfare enhancing interventions to poor populations and make their lives better. There are some great examples historically of how this has, you know, been possible, but there wasn’t kind of a clear business rationale for a lot of this, and, you know, lots of things I saw early on in the healthcare space around, you know, trying to distribute medicines to rural, remote populations through these agents who were then kind of paid, you know, and so that you might consider that a private sector framework, a lot of that kind of fell short of what I was really hoping for in academia and in the policy world, which was, can you actually generate a business case for intervening amongst poor populations? And I think that the sort of easiest way you might be able to do that is within large firms that are very labor intensive. So, you know, take your average, you know, manufacturing sector, firm, big place, employees, 1000s of people, all working back jobs, most of them being, you know, low income individuals. Maybe there’s a vested interest there for that business to take care of its workers, and maybe that can actually generate, you know, improvements in their lives that are compatible with the business, uh, functioning as well. So that’s the sort of hypothesis that I felt was under explored, both in academia and kind of in the real world, where you’re seeing more and more sort of conflict between, you know, workers and management and kind of dividing up this fixed pie, or fighting over wages, fighting over benefits and training and all that kind of stuff. You’re seeing strikes all over the world related to this that we’re sort of missing the thread a little bit on maybe there’s an area of common ground where we can all function, and what does that area look like? What are the kinds of interventions that might work? What are the kinds of interventions that have gained traction but don’t actually work? And those are the kinds of questions that I sort of becoming interested in from an academic perspective. And then to your question about good business lab, we realized very quickly, my co founders and I, who started working in this space, in a large garment firm in India, that just publishing academic work was. Just not going to do it. It wasn’t enough to actually move the needle and change the minds and the actions of decision makers who could actually generate impact. So, you know, in addition, the fact that nobody, nobody reads the work that we do, it makes up for a sort of select, you know, group of academic elite, or something like that. It’s also the case that it’s often hard to translate what we’re doing in academia and the questions we’re asking into real world, practical knowledge that can be applied, that can be used to change a policy in a firm, etc. So that’s why we set up Good Business Lab, along with another huja. And we thought, hey, you know, we’re generating some interesting insights here, but they’re going to sort of echo in the in the ether, so to speak, if we don’t really kind of devote serious resources and time and attention towards actually generating some change in people’s thinking. And so that’s sort of how we came up with the concept for the for the NGO, and it’s just grown from
Gene Tunny 11:12
there, right? Okay, geez, a lot to talk about there arch That’s fascinating. A few things I’d like to follow up on, so you ended up working in East Africa. Was that part of a research project? Was that, after you did your PhD, how did you, how did you end up in East Africa?
Achyuta Adhvaryu 11:30
Yeah, that was actually during my PhD, after, after my first year in the it was, to be honest, a little random, I knew I wanted to work in the sort of development economic space, basically the areas of poverty alleviation. I was interested. I was drawn to health care access. And I was, I was dating my wife at the time, who was just starting out, or she was doing her senior thesis in college, and she was going to do it in Tanzania. And I said, Hey, I like this girl. I’m gonna go Tanzania too. So I started blindly emailing my professors and saying, hey, I want to go to Tanzania and look at something related to health and development. What do you think? And I, you know, was fortunate enough, through a chain of emails to be connected to the Centers for Disease Control and Prevention The CDC mission in Tanzania. And the head of that mission was a extremely nice man who kind of said, Hey, sure, why don’t you come over and help us with the survey we’re doing, and you know, we’ll see where it goes from there. So I said, Great, this sounds like a wonderful summer, and I get to be, you know, with this girl that I was, you know, head over heels for. So I was excited to do it. That’s the really kind of serendipitous start to the My Work in East Africa. But, you know, I grew to love it. And I think there’s, of course, so many really interesting and meaningful questions to tackle in that space around health and development, I worked in the delivery of a new malaria therapy, because malaria is obviously a huge problem in parts of Sub Saharan Africa, you know, one of the leading killers of kids Around the world. And you know, it’s entirely treatable with therapies that you know you just have to get access to them. So it’s one of these problems of last mile delivery that are both incredibly important, literally life and death questions, and also really interesting from the kind of program delivery and academic perspective of, how do you kind of ensure that all potential beneficiaries receive access? Yeah,
Gene Tunny 13:49
and what did you conclude in that project into because you mentioned before that there are issues with efficiency and accessibility. How did That’s right, yeah, What? What? What type of findings did you end up making?
Achyuta Adhvaryu 14:01
I think there are two broad learnings, one of which was kind of specific to the work that I was doing. And I was around how people learned about new therapy and choose to try it out. Because, you know, the easiest thing to do is kind of default to what you already know. And so if your kid is sick, you say, Okay, I’m gonna go to the drugstore and pick up Chloroquine, or, you know, one of these therapies that has existed for 50 years, but it’s not very anymore. But then you gotta, you know, in the case where that doesn’t work, you might take a gamble and say, hey, the, you know, government clinics got this new artemisinin based combination therapy. Why don’t I give this a shot and see how this works for my child? But kind of taking that leap of faith is costly, because government clinics are very far away from these remote, rural populations. So you know, this meant probably losing out on a couple days of work. And, you know. Walking all the way to the clinic and all that kind of stuff. So my research really was about sort of how people learn, as they kind of experiment with these new therapies, how you might learn about the effectiveness of new therapy, and in a environment where misdiagnosis of malaria was extremely prevalent. So you know, often you just say, I think you have a fever, you should go have some malaria medication. But, you know, half the time it’s not malaria. And so, you know, if you actually had good diagnosis, then you’d get much more effective adoption of treatment, which is the kind of, kind of 10,000 foot takeaway from my dissertation work. But the other thing it taught me was, again, the role that the private sector plays, inevitably, because in all of these villages, there was at least one, what they called Duka, which is like a little shop that sold medicines and is usually staffed by someone who, literally, you know, has no medical experience, no training, etc. It’s just a person who, you know, could get their hands on some meds. And maybe, you know, in a lucky case, it was a, it was a nurse or something, but usually it was somebody who just, you know, my uncle, you know, can get me these medicines. And so I’m going to sell them in the village. And they have no idea about how to diagnose kids with these kind of life threatening diseases, etc, so, you know, but they’re nevertheless that that’s the sort of like first line of defense against malaria and other important diseases, right? Because everybody’s using these guys. So how do you guys started thinking, you know, we can’t just focus on the government clinics, because those are useful, but they’re really far away. Nobody from until they’re really forced to. We really should be focusing a lot on, how do we strengthen the capacity of these guys, who are these shopkeepers and owners? Maybe make them a little bit more in tune with what works and what does and what are the newest therapies, maybe connect them to supply chains, et cetera. So that’s when the wheels started turning. The private sector being an important
Gene Tunny 17:04
player, right? Okay, okay, that’s, that’s all fascinating. And you mentioned, historically, there have been some good examples of private sector doing, you know, positive things for I’m trying to remember what, what exactly you you were saying, but I guess you, I imagine, are you talking about things, organizations like friendly societies. What type of organizations are you? Do you have in mind? Well, you
Achyuta Adhvaryu 17:28
can just, sometimes the the private sector, just doing its thing, just, you know, out there to make a profit, still, kind of tax society. So one great example that I love giving. I’ve done some work on this in an academic paper, is the story of Morton salts, the, you know, big salt company in the US. And, you know, I’m sure you’ve seen that you can, when you go to the grocery store, you can buy salt that’s iodized, which has iodine added and salt as and, you know, we’re all instructed to to buy the iodized kind because it, you know, prevents goiter and, you know, cognitive deficiency. It’s particularly valuable as micronutrient for pregnant moms, etc. So iodine is kind of a really critical to, you know, all kinds of cognitive and brain development. Turns out that most countries in the world, including the US, before the 1920s had just rampant iodine deficiency disorder and depended on where you were. So if you’re near the coast and or, you know, these iodine kind of reserves around the country, then you were okay, because a lot of the sort of plants you ate and the meat that you ate had iodine in there. But if you didn’t, for example, you didn’t eat fish, which is a great source of iodine, or you lived inland or lived in a mountainous region, Switzerland was particularly bad with iodine deficiency then, then you were just not getting enough. And so this actually prompted the government to work with, you know, a bunch of physicians and researchers who had kind of discovered this link between iodine deficiency and cognitive disorder to try to figure out, how are we going to get iodine into the population? And they concluded that one easy way was to add it to salt. It was a very simple process that you could fortify the salt with iodine. And Morton Salt was the largest salt distributor in the country at that time. And you know, the the there’s a doctor at the University of Michigan who actually convinced some local producers in Michigan to say, hey, you know, you guys have a big problem with iodine deficiency. I think it might be a competitive edge for you if you’re competing with this big name Wharton salt, if you just, you know, put iodine in your salt, and you kind of advertise the benefits of that. And. They ended up, you know, being convinced. And they went ahead and did that. And so Morton Salt had to compete with this, you know, new newfangled salt that had iodine. And so they said, Well, you know what, instead of just changing what we’re doing in Michigan, why don’t we offer I iodized salt across the country, and we’ll make it exactly the same price. It was 10 cents at the time for a canister of salt. So we, they said, you know, we’ll have the regular canister and we’ll have the iodine fortified canister, and we’ll, you know, they’re going to be on the shelf, and they’re both going to be 10 cents, and people can do what they want. And of course, it turned out, you know, through good, good messaging and marketing, they made people aware that this was actually a problem, and people chose to go with the iodized salt. It’s so cheap to fortify iodized salt that this sort of really made Morton Salt corner the market, and within a matter of basically 10 years, 15 years, iodine deficiency disorder was erased in the US, except for very remote communities. So that was just like a really wonderful story. You know, Morton Salt did this purely through competitive forces. They wanted to stay in business again. They said, Hey, we better get on board with this thing. And it turns out, you know, they were able to solve a huge public health issue that had massive implications for cognitive ability, and, you know, rates of goiter medical condition in the US.
Gene Tunny 21:29
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Gene Tunny 22:04
Now. Back to the show, arch. Can I ask about now Good Business Lab, so we’re up to, would be good to talk about that? So you mentioned you were studying development economics, and there was a view among some academics, or don’t get your hands dirty, but you saw that there are a lot of good insights from development economics that could be applied in the real world or some of the research that was occurring. You mentioned colleagues of yours, the flow and and Banerjee, is it? Yep, and you’ve got your your good business lab, you’ve set up this NGO or this nonprofit, and you’re looking at your, you mentioned, large firms, labor intensive, and potentially, there’s some interventions that can be undertaken to to get better outcomes. Can you tell us about some of the the work you’ve been doing with good business lab and how you’re trying to get those better outcomes in business, please.
Achyuta Adhvaryu 23:03
Yeah, sure. So that’s, you know, it’s a, it’s a big blank slate when we started out in terms of what might work, right? So I think there’s lots out there that people, you know, with reasonable amount of common sense might think, okay, if your workers are really poor and unhealthy, for example, then improving their health a little bit in the workplace might actually generate some, some gains, you know, for them, and also kind of be useful for the firm. They might they might be more productive at that work. They might be able to do more. They might be absent less. They might stick around longer. Same thing with skills, you know, it’s another big bucket. Lots of firms provide skills to workers, and the idea is that, you know, well, if you, if you make the worker more productive by providing the skills on the job, then they might generate more productivity for you, and also kind of stick around longer, etc, but a lot of these theories were kind of untested, right? So there was a lot of kind of going with your gut here in terms of what firms were doing and also what academics were advocating for, right? And the NGO sector was advocating for so we came into the space and said, Look, some of these things may actually work, and they might actually be great. Some of them may not, and might actually generate, you know, either nothing for workers or may not actually feed back into any kind of productivity or profit for the firm, in which case, let’s not spend resources on that stuff. So can we actually generate a menu of things that firms can look at and say, I want to invest in my workers in a way that benefits them, and also then in some way? Comes back to me some and affects my bottom line that we can generate. What does it look like? What are the types of interventions? So we went in on on some of the most obvious ones first. So the first kind of set of studies we did were around skilling inside the firm, and in particular, we focused on soft skills, which is actually, you know, a little counterintuitive for most people, when you’re thinking about a blue collar workforce, right? Like imagine a factory worker on a production line. What good is, you know, leadership and communication and teamwork skills and conscientiousness and all this kind of stuff that you usually think about when you are thinking about soft skills. What good is it for that worker? Right? We usually think that those are skills that white collar workers might use, that you know, a good CEO should have, etc. Turns out that, according to our research, those skills actually end up being incredibly important, even for frontline workers. And start, you know, digging a little past the surface, you sort of start to understand why. It’s because the production line is really just a large team, right? And you’ve got 50 other team members on that line, or 70 other team members. You’ve got a boss you’re communicating with. There’s lots of stuff that you need to do on that line that has nothing to do with the technical skills, like, you know, putting a car part on a car, or, you know, stitching together the sleeves of a T shirt or whatever, right? All this stuff that you know you’re doing on the on the factory floor is also related to how you know, skilled you are at communicating with your team members, right? So, if there’s a, if there’s a, you know, a block in, in the line that’s kind of slowing you down. You have to look back and say, Hey, can I help what’s the problem? How do we, you know, how do we speed things up? If there’s, you know, a problem with your machine, you have to raise your hand and talk to your boss and say, Hey, there’s, there’s something that’s stuck here. I need some help fixing this. If I’m not feeling well, I might need to raise my hand and say I need some help today. Or if I have a friend who’s not feeling well, I might tell my boss, maybe we should help out. You know my friend over there, because, you know, Gene’s not feeling well today, and he’s he’s likely to be unproductive. All of those things are soft skills. And you know that seems easy enough to do, you know if, if you went to good schools, had a good education, you know, grew up in a good community that sort of fostered those kinds of communication and teamwork and leadership skills and patience, etc, then those things are sort of ingrained in you already, but for people from low income backgrounds, that’s often not the case, right? That you know, they went to a school that didn’t teach any of that they might have. You know, not grown up in a family that encourages people to speak up and say what they’re feeling. So you know, for a variety of reasons, they’re coming into the workplace with low levels of these skills, and so just improving those fundamental skills and connecting them to the kinds of activities that that workers do in the workplace generates both kind of increases in the skills that those people have, but also feeds back into productivity. So in one program we evaluated, which is called the PACE program, which is essentially the flagship CSR corporate sustainability program for gap, the clothing company, which was kind of trying to, you know, proliferate across its supplier network all across the world, that program, which is a soft skills training program for female garment workers, generated an 18% improvement in productivity and a net rate of return because of that huge increase In productivity of about 250% after 18 months. So it was a huge, huge, you know, hugely beneficial program, both to workers who really, really thrived after taking the program and to management, because productivity went up substantially. So that was our first kind of foray into the soft skills space, and since then, we’ve run several other trials that have basically confirmed the importance of soft skills in the workplace. So we did this at a higher up level, which I can talk about more if you’d like, but that was a managerial training program we evaluated, which we developed ourselves based. On firsthand, on managers in these garment firms that we’re working in, and that also generated six or 7% increases in productivity. And given that it wasn’t very expensive, a program to implement, the rate of return was was astronomical. So the program, you know, returns about 50 or 60x in the two year period. Kind of following programs implementation to the firm, which is kind of about as good a rate of return as you’ll ever get on any intervention. So I think, through a variety of work, you know, I’m convinced, in general, that soft skills at all levels are incredibly important for workers. The other kind of bin that we’ve been working for quite some time in is around worker voice. And so this is the basic idea workers when they don’t feel heard, when they feel like I have a grievance or a concern, and I keep telling my boss about it, but he’s not listening. He’s not changing anything. Or I can’t even speak up to tell my boss about it because I’m fearing repercussions, etc. They feel disempowered, and at the best, you know, they’ll quit and, you know, move on to another firm. But at worst, you know, we see some of the worst examples of this playing out in the strikes and protests sometimes that turn violent all over the world, where workers don’t feel heard enough, and that feeling kind of just boils over and results in a lot of strife. So we kind of have been interested in this space for a long time, especially in environments where you know the union for workers is really supposed to be the megaphone, right for concern, for airing out your grievances for negotiating, you know, with with management on important things like wages and benefits. But in a lot of parts of the world, unions either don’t exist or are extremely weak. You know, they have very low membership for a variety of reasons. You know regulation, you know the court cases against them, you know the sabotage on the part of firms. You know there’s, there’s lots of, lots of, you know, bad stories about this, but basically in a lot of places, you know, you rarely see workers as part of a union. This is true in India, where I work a lot. So, you know, we started thinking about it. You know, in short of that kind of best case scenario of having a union rep that can really advocate for you. How do you kind of air out grievances in a way that kind of results in something changing about your situation. And so we did a series of trials, basically to enhance worker voice through technology. And you know, this could be as simple as just asking you how you’re feeling through a satisfaction survey, or, you know, custom a worker pulse sort of check, or it could be sort of more involved, or, you know, use more technology. For example, there are a lot of apps out there now that that help workers, you know, anonymously convey their messages to HR. So we basically tested all the above, and through a series of trials, we concluded that worker voice is incredibly important. It actually generates a lot of turnover amongst workers when you don’t have appropriate voice for your concerns, and when you provide technology or an intervention that enables people to air out their concerns, if they have them, they leave at lesser rates. They’re less likely to be absent. And in the best case scenarios, especially when you get HR really into it and incentivized to do a good job with these complaints, you can actually increase productivity as well. So you know that work has kind of taught me broadly that worker voices matters a lot, and simple interventions that encourage the voice of workers and encourage HR to respond appropriately in a timely manner can make a big difference for workers and also for the bottom line. Rod,
Gene Tunny 34:55
okay, that’s fascinating. I’ve got a couple of few follow up questions. It’s first on that worker voice one. So is it the fact that you mentioned there’s improved productivity? Is it? Do you know what the mechanism is? Is it the fact that HR resolves whatever dispute there was, or is it just the fact that the worker feels better, they’re less likely to slack off, or that, or they’ll work a lot harder, like, because you’ve got some choice into the level of work effort you put in any job, okay,
Achyuta Adhvaryu 35:28
yeah, yeah. So I think it’s a combination of those. So, you know, part of, part of the, the mechanism here is that I’m kind of more likely to reciprocate, you know, the effort that I’m you know, in terms of the sort of effort that I perceive is given to me, right? So, yeah, if I’m over here being like, Hey guys, my supervisor is, like, really yelling at me. He’s not behaving nicely. It’s not that I’ve done anything wrong, and he treats me really badly every day when I come to work and I keep telling HR this, and they don’t do anything. Ultimately, I’m, you know, kind of convinced, like nobody’s paying attention, or if they are, they just don’t care. And that’s potentially going to make me also do the same thing, like, Hey, I’m not going to, you know, put out for like, a, you know, somebody who doesn’t care, care about me, and I’m not going to sort of break my back over, over, you know, creating, you know, more production for these folks who are just not, you know, listening. And I think that that’s what generates absenteeism and turnover and that kind of feeling of not being valued. But there’s also kind of a instrumental feature of voice that I think resembles the Kaizen system, if you’ve heard of that in Toyota, sort of famous management system that Toyota uses to be so efficient in their workplaces. That’s something that you that’s a central tenet of the Kaizen system, is constant feedback and revision of processes. So there’s a constant, you know, we have an open channel from workers to say, do you guys are the ones on the ground. Sometimes we’re not gonna be able to see what the problems are and how they arise and all that. You know, you have a new model of a car in there, you’re gonna have to figure out, you know, how to attach all the parts together. And sometimes they don’t go together exactly how they should, and we have to modify things. The workers are the ones who are gonna be kind of coming up with those ideas first, and if they feed those up, you know, to management, then you can kind of change that process and become more efficient. So having that open channel, in addition to sort of just, you know, allowing workers to air out their grievances and have them be addressed, is also a method of communication within the hierarchy that allows workers to suggest things that might be beneficial or useful, and for those things to then filter up and change processes change the way that production is
Gene Tunny 38:09
done. Yeah. Okay, I’d like to ask about the you mentioned gap clothing company before the female garment workers that had a 18% improvement in productivity. PACE program, right? Yeah, PACE program, right. How do you measure this? How do you set up the like, how do you set up the study? Is it a randomized control trial? Or can you tell us a bit about the methodology please?
Achyuta Adhvaryu 38:35
Yeah, sure. So. I mean, when possible, we use the sort of gold standard for impact measurement, which is a randomized control trial. And, you know, we’re used to this in the post covid world, where we all hearing about the trials that were done on the various covid vaccines and all that, but they’re, you know, it’s pretty simple in the sort of medical setting you usually have, you know, a treatment group that’s randomly selected from a population. And given the, you know, the treatment, or the vaccine or whatever it is, we’re trying to test the impact up, and then we test that against the control group who’s randomly selected and receives the placebo. You know, in most medical cases, or, you know, something similar, that that that might generate placebo effects, but doesn’t actually like convey the the medication or the or the or the vaccine. So same thing happens when you do trials in social science research. You essentially have, you know, a treatment group who gets an intervention and a randomly chosen control group who doesn’t. And depending on the type of intervention it is, you know, you might get a placebo or not have placebo. You might have a blinded trial or not. It also depends on the setting. In our settings, you know. Being these kind of large workplace environments, we often use a method of randomization that essentially amounts to a lottery, because we’re introducing these new programs, these new benefits, and we want to test their effects. And so we often kind of say, hey, we come into these factory settings, and say we’re trying, trying this new program out. If it works, then, you know, there’s a possibility that everybody will get it. But right now, there’s not enough resources to give this, you know, intervention to everybody, so we’re going to try it out on a subset of the folks who are interested. And just to be fair, we’re going to do this totally randomly through a lottery, and so we have everybody sign up to see if they’re interested. When the people that sign up, we run a lottery, and we pick out people will be part of the treatment group, and the, you know, remainder will serve as part of the control. So that’s the sort of basic methodology we use. And it ends up, you know, being quite palatable in a lot of workplace environments, because think a lot of people buy into the idea that there’s something fair about random allocation, right, that, you know, there’s nothing that’s making, you know, you more likely to get it than I am, and that sort of thing. We’re just, there’s a limited resource, and we’re, you know, allocating it in the sort of most fair way possible that allows us to really measure impacts by controlling by tracking the outcomes of the treatment and the control groups over time, and we can figure out what sorts of impacts the program had on workplace, things like productivity and retention and things like that, as as well as you know, survey outcomes like you know or or outcomes that are relevant to workers, like their health or, you know, mental well being or satisfaction. So that’s the sort of methodology that we use. And, you know, in terms of in terms of measurement of productivity, that I think, is actually a really critical innovation that that I’m proud to say we spend a lot of time on, because we work, we tend to specifically, kind of like, focus on industries where we have labor intensive, you know, production, but, but also we can, in Some way, measure productivity really well, you know? So that sometimes is pretty easy because the firm’s already measuring it like, you know, we work a lot with the retail industry, and there’s really good measures of the items that come through a cash register. So know who’s standing at that cash register, right? Who’s working there, you can track their productivity really, really well. And sometimes it’s a little harder, like, you know, when you’re working on a production line, often the firm doesn’t really care what each particular worker is doing. They just care what the whole line is doing, right? How many T shirts came off this line? How many cars came off this line today, that sort of thing. So there is a little harder and we have to go in and do our own measurements. So we’ve installed all kinds of fancy devices to do that, including tablets and push buttons and, you know, RFIDs on and tags and all kinds of stuff. But we, you know, you know, with the end goal being, what firms really care about is productivity. So if we’re measuring productivity, we’re missing out on a big part of the story. And so that’s what we’ve devoted a lot of, you know, blood, sweat and tears to in our research. Yeah,
Gene Tunny 43:33
okay, that’s it all. Sounds great. Just wondering. Have you given any thought to this? There’s this concept of the Hawthorne effect, that people change their behavior in response to being monitored or taking part in that in a program, and that’s why, you know, it’s good to have some sort of, you know, might be good to have some sort of placebo involved, but in social science research that could be very difficult to do, how do you think about the Hawthorne effect, and how Does it affect your interpretation of your results? Is it something you’re concerned about at all?
Achyuta Adhvaryu 44:04
Yeah, that’s a great question, and we’re definitely concerned about it in most of the trials we do, and something that our academic reviewers are often concerned about when we when we are publishing the work and having it reviewed in academic journal. Because, actually, it turns out, you know, that the Hawthorne effect itself was in a factory, I think, in Hawthorne, Ohio, or something like that, right? Like it was, it was a, is a factory, you know, here in the US, where those original trials were done, and it was actually related to, like, light on the factory floors and things like that, but, but, you know, it’s a very important concept, and I think the you know, short answer is, for some outcomes, you can actually, you. You know, test for Hawthorne effects in a reasonable way. So, for example, if you’ve got a treatment group and a control group, and you know, they’re selected into this experiment, and we, you know, we ran this sign up first, and then we ran a lottery, and we are surveying everybody, you might think that even the control group is kind of changing their behavior, right? Because they’re being monitored, they’re being asked questions, etc. But we usually have that’s usually a sort of a minority of the participants of the workers in any particular factory that we’re working in, right? So doing a trial, it might be several 100 workers in the trial, not the like three or 4000 that are in the factory. So there’s lots of other workers in the factory who we are also passively seeing the outcomes for for certain things like retention, absenteeism, productivity, you know, salary, all these kind of kind of workplace stuff. And so, you know, we can actually look at them and compare them to the treatment group and the control group. To see, are our treatment control groups looking very, very different once, once we start the experiment, start measuring them. The answer, you know, across most of our trials for those kinds of set of outcomes is no, there’s, there’s really no difference in how, in the behavior of, you know, people who are not in the trial versus people who are in the trial, but in the control group or treatment group. So you know, so I think that on those outcomes, sorry, the control group, the treatment group, we hopefully see an effect over time. So those kinds of outcomes, we don’t see big evidence of Hawthorne effects, certain outcomes we can’t really test. Like, for example, if we, if we surveyed everybody in the treatment group and control group, then that might change their behavior. But we’re not surveying people outside of the two groups. So, you know, can’t really tell whether, whether that’s going to sort of like, affect things. Then sometimes there are these, like questions that you you know, survey methodology, questions that that that sort of reveal that some people, some respondents, are actually more likely to be swayed by being observed. And if you can measure that then you can look for whether the treatment effects were bigger or smaller in that group. And so, so we do that sometimes too.
Gene Tunny 47:29
Oh, good. Okay, I have to look at some of your your your papers. That sounds yeah, there’s all of these, all of these tricky methodological issues. I’m sure you’d have clever reviewers, peer reviewers, asking about a couple more questions just before we wrap up. Because this is fascinating. Oh, actually, might be three more questions. What’s the level of replication of these type of findings? Do you see other researchers replicating findings like this? Yeah,
Achyuta Adhvaryu 47:57
yeah, absolutely. So for some of the work that we’ve done, you know, the two examples I’ve mentioned, there’s been really great work that’s come out of the World Bank that followed up on our study and tried to, you know, Institute similar programs around soft skills in, for example, in factories in East Africa, because East Africa has these big manufacturing hubs as well. And similarly, actually, there’s been some work kind of in parallel to ours that looked at soft skills interventions in I believe it was German firms, German retail firms, if I’m not mistaken, and they’re also working with frontline workers. They also found, you know, pretty substantial impacts of soft skills training. There’s another really interesting trial in Togo that a bunch of World Bank researchers did on something called personal initiative training, which essentially involves a lot of soft skills. Then this was for sort of micro enterprise owners. So basically, people who are, like, selling, you know, stuff on in their carts or on the street, or, you know, in these very, very small businesses, I just usually have, you know, the owners, the the only employee, and there too, this kind of soft skills training resulted in huge gains in profit for those micro enterprises. In fact, that trial ran a horse race between soft skills training and the World Bank’s flagship business training program, and that then and beat the pants off the business training program. So that was really interesting trial, too. So in general, I think soft skills, we have really seen a huge growth in in trials and evidence on this that really complements the stuff, most of which was in the US, you know, like Jim Heckman and folks have been thinking about this for a long time in the US. Labor. Market, but hadn’t, kind of made it outside of the US. And then same thing for worker voice, tons of research has emerged right around the same time that we’ve been writing ours trials as well as kind of observational stuff in very varied contexts. There’s a great trial in Chinese auto firms that that looks at improving worker voice and finds big impacts on productivity and retention there. And then there’s a, there’s a great study on improvements in worker voice from kind of white collar firms in Denmark, and that also finds it back. So, you know, I would say in some Scandinavian country, I can’t remember, but, you know, you find very kind of ubiquitous impacts of voice as well. So some of these things I find, you know, it’s nice to see that sometimes, you know, if you do one trial, that’s sort of like it gives you sort of one data point. But then, you know, is that echoed around the world. And can you really say something more general about this? And I think that’s at least in these two domains, we’re seeing very similar findings emerging all around the world.
Gene Tunny 51:13
Yeah, I think I’ve seen that study. Yeah, maybe I can’t remember the country. It may have been Denmark, but yeah, I’m pretty sure I talked about that on a previous podcast episode to dig that out that that’s good. Yeah, yeah. So that’s that’s great. And the final question is, how do you see this as part of the whole convergence, or whole economic development catch up story? Is this a big part of it? How does it compare with other other factors, you know, technological transfer, that sort of thing, how big a part of it is?
Achyuta Adhvaryu 51:50
It was to say two things on that front. I mean, first, I actually think that, you know, a lot of the things we do are, I think, relevant, not only for, you know, workers in low income country contexts, but also low income workers, or workers that are sort of resource poor in in even in high income context. So like, you know, your average and we’ve been starting this work across, across these various contexts, Good Business Lab has an office in Colombia that has been doing a lot of work with firms across Latin America and the Caribbean, and we’re finding exactly the same issues, even though it’s a very different context, generally higher income levels than India and South Asia and East Africa. So, you know, I think you see these issues cropping up with sort of frontline workforces all over the world in terms of convergence. It’s a great question, and I don’t have a numerical answer for you, but I think my intuition is that it does play, you know, a substantial role in some of these interventions kind of do play a substantial role in the kind of, at least, when you’re thinking about productivity differences that we see across countries. Because, you know, there’s some really great work that you know, Shay and kleenow and Chad Severson and other folks have done the macro setting, looking at productivity across countries and finding these astonishing numbers like, you know, the US is something like, you know, 10 times as productive as the worker in India, okay? And even if you control for the kinds of technology that people use, and the industry and a bunch of other things, that even that residual productivity difference is like 4x the average one in India is four times less productive than in the US. And that gap is even bigger if you look at Sub Saharan Africa. So you know, then the real, sort of motivating question behind a lot of my work is what the heck is going on there? That’s crazy, right? That that, you know, even if you take away all these kind of, you know, industry specific, technology specific, capital specific differences, you still get this really low productivity. And my answer to this has been to look at the kinds of inputs that workers are getting, and managerial and organizational inputs that the firm is getting. So on both those fronts, I think that there’s kind of a dearth of for example, like the average worker in the US is going to have slightly more soft skills at baseline than the average worker in India, just because the educational system, the average manager in the US is going to have more managerial skill in the than the average manager in India. So, you know, those kinds of differences, I think, do play a big role in that convergence. If you’ve seen the work by Nick bloom and John Van Reenen. Look a lot of cross country productivity differences, and can attribute a substantial portion of them, you know, I don’t want to quote a number without looking it up, but, you know, it’s a sizable fraction can be attributed to managerial quality differences. So, and I see that as a form of skill as well for workers. So I think, you know, without getting too specific, I do think that this has to play a role. And the more we can, kind of, I think our point is that, in our work, is that sometimes you can, you know, a lot of people think, Well, look, there’s a fixed pie here. The more we give to workers that’s going to make them better off, but it’s going to leave less profit for us, right? And I don’t think that’s necessarily the case. And we’re trying to find counter examples to that intuition such that that common ground can be large enough that firms can feel comfortable living in it.
Gene Tunny 55:57
Yeah, that’s terrific. It’s good work. I’ll put a link in the show notes to Good Business Lab. Is there anything else I should link to? Any anywhere else we can find what you’re up to?
Achyuta Adhvaryu 56:10
Oh sure. Well, if you if you just link to india.ucsd.edu, it’ll take you to the other hat that I wear is that I direct, the 21st century India Center at UC San Diego, which is kind of a policy center related to economics, political science and science and technology policy on India and US India relations. So, you know, we deal with a lot of the same ideas we’ve been kind of talking about in this podcast. But broader than that, there’s lots of fantastic faculty at UC San Diego. It’s really sort of a one of a kind place when it comes to, you know, economics in India. And you can find out much more at that website, but encourage folks to to go check it out, in addition to GBL work.
Gene Tunny 57:02
Oh, terrific. Okay, I’ll have to check that out. Might have to chat sometime in the future about that work. But actually, has been terrific. I really enjoyed this conversation. Yeah, I think it’s, it’s, it’s great that you’re, you’re seeing these positive results and from programs such as worker voice and the the also the soft skills, I think, yeah, that that makes sense intuitively to me. And yeah, I’ll, I’ll make sure that I keep up to date with with what you’re up to. And yeah,
Achyuta Adhvaryu 57:36
that sounds great. Yeah, I appreciate being on and, you know, I will say I was unable, probably did not do justice to the to the breadth of the menu that we’ve been able to create. So I would check out the GBL website if you’d like you know more information, or if you’re interested in getting, you know, involved in what we’re doing. So thanks a lot for highlighting that.
Gene Tunny 57:59
Yeah, no problem. And absolutely. I mean, that’s, yeah, that’s the that’s the challenge with this sort of thing. When you when you’re doing so much good work, how do we cover it in an hour? But yeah, we might have to. I’ll have another look at it, and might have to connect with you again in the future. All the best with the work, and hopefully I’ll connect with you again soon. Thank you. Cheers, righto. Thanks for listening to this episode of economics explored if you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you, then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.
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