Setting The Right Expectations

The political economy of policy making often necessitates that the potential benefits of proposed policies be widely disseminated, and the potential costs hidden, so that policies are most effectively “sold” to the public and its elected representatives. Our research points out that doing this comes at an inherent cost: the more a policy is oversold, the less likely it is that its effects will live up to expectations. If the gap between expectations and reality is large enough, even objectively successful programs may fall prey to disappointment, and subjective wellbeing may decline. Worker satisfaction depends critically on how expectations are set by firms.

Is communicating accurate expectations important for ensuring sustenance of worker wellbeing after objectively successful interventions? What is the extent to which housing quality impacts migrant workers’ satisfaction with their working conditions?

We used a randomized controlled trial to investigate how improved living conditions in hostels affect migrant workers’ satisfaction and turnover. The hostels we studied were employer-managed. In two phases, hostel management was transferred to a local NGO specializing in worker welfare with specific experience managing migrant worker hostels. There was a gap of approximately five months between phases, during which phase 1 hostels were under the new management and phase 2 hostels were still being managed by the employer. At the end of this five-month gap, we surveyed a random sample of workers from all hostels to study differences in living conditions and the subjective wellbeing of workers generated by the change in management. The firm’s administrative data also allowed us to track retention of migrant workers.