Battalio, R., L. Green and H. Kagel

Battalio, R., L. Green and H. Kagel, "Income-Leisure Tradeoffs of Animal Workers" American Economic Review 71 (4) (September 1981): 621-632.

Goal: Test the basic static labor supply model using hungry pigeons.

-Labor (h) is pecking on a key

-One unit of Income (Y) is three seconds’ access to mixed pigeon grains

-The wage rate (w) is the amount of income generated per peck.

Wages varied from

.0025 (=1/400, i.e. 400 pecks required for a unit of income), to

.0800 (=1/12.5, i.e. 12.5 pecks required for a unit of income). Note this is a 32-fold wage increase!)

-A unit of non-labor income (G) is 3 seconds free access to pigeon grains. The experimental design and predicted results:

Income (Y) X: Initial equilibrium.

Y: Equilibrium after a compensated Initial budget line: High wage decrease: MUST be to the wage, no free food. right of point X.

Second budget line: Compensated wage Z: Equilibrium after a decline in decrease. X nonlabor income (G). If Z is to the ∙ Y left of Y, leisure is a normal good. ∙

Final budget line: Remove nonlabor Z income ∙ Leisure

T Methods and Results:

Four pigeons got used to the initial condition.

1. A compensated wage decrease was implemented 22 times; 19 of these times labor supply fell. The size of the response was very bird-specific and consistent within birds:

Figure 2.4: Pigeons’ work effort before and after a compensated wage cut, by initial wage rate 2. Leisure is normal: In all cases, reducing free income at a fixed wage raises labor supply. 3. The uncompensated (Marshallian) labor supply curve is nonmonotonic, or “backward bending”. In other words, raising the wage at a fixed level of G (i.e. an uncompensated wage increase) first raises, then reduces labor supply. Total income earned, however, rises monotonically with the wage. 0 0 0 0 5 4 5 0 0 3 0 0 d 0 e 5 m r e o f 0 m r 0 o e c 2 p

n I k r o 0 0 W 5 4 0 0 1 0 0 0 0 4 0 200 400 600 800 wage rate

Work Income