The Effect of Differential Incentives on Attrition Bias

Abstract

Respondent incentives are widely used to increase response rates, but their effect on nonresponse bias has not been researched as much. To contribute to the research, we analyze an incentive experiment embedded within the third wave of the German household panel survey “Panel Labor Market and Social Security” conducted by the German Institute for Employment Research. Our question is whether attrition bias differs in two incentive plans. In particular, we want to study whether an unconditional €10 cash incentive yields less attrition bias in self-reported labor income and other sociodemographics than a conditional lottery ticket incentive. We find that unconditional cash incentives are more effective than conditional lottery tickets in reducing attrition bias in income and several sociodemographic variables.