Hawthorne Effect

DEFINITION of 'Hawthorne Effect'

The inclination of people who are the subjects of an experimental study to change or improve the behavior being evaluated only because it is being studied, and not because of changes in the experiment parameters or stimulus. The Hawthorne Effect refers to the fact that people will modify their behavior simply because they are being observed. The effect gets its name from one of the most famous industrial history experiments that took place at Western Electric’s factory in the Hawthorne suburb of Chicago in the late 1920s and early 1930s. However, subsequent analysis on the effect by University of Chicago economists in 2009 revealed that the original results were likely overstated.

BREAKING DOWN 'Hawthorne Effect'

The Hawthorne experiments were originally designed by the National Research Council to study the effect of shop-floor lighting on worker productivity at a telephone parts factory in Hawthorne. However, the researchers were perplexed to find that productivity improved not just when the lighting was improved, but also when the lighting was diminished. Productivity improved whenever changes were made in other variables such as working hours and rest breaks. The researchers concluded that the workers’ productivity was not being affected by the changes in working conditions, but rather by the fact that someone was concerned enough about their working conditions to conduct an experiment on it.
 

RELATED TERMS
  1. Kickback

    The payment of something of value to an individual with the goal ...
  2. Frame Dependence

    The human tendency to view a scenario differently depending on ...
  3. Bandwagon Effect

    A psychological phenomenon whereby people do something primarily ...
  4. Socionomics

    The study of the relationship between social mood and social ...
  5. Behavioral Economics

    The study of psychology as it relates to the economic decision ...
  6. Behaviorist

    1. One who accepts or assumes the theory of behaviorism (behavioral ...
Related Articles
  1. Active Trading Fundamentals

    Understanding Investor Behavior

    Discover how some strange human tendencies can play out in the market, posing the question: are we really rational?
  2. Investing Basics

    Avoid These Common Investing Psychology Traps

    There are a number of very common psychological traps or errors that investors typically make. You can save a lot of money and misery by avoiding them.
  3. Investing Basics

    Modern Portfolio Theory vs. Behavioral Finance

    Modern portfolio theory and behavioral finance represent differing schools of thought that attempt to explain investor behavior. Perhaps the easiest way to think about their arguments and positions ...
  4. Investing Basics

    Behavioral Bias - Cognitive Vs. Emotional Bias In Investing

    We all have biases. The key to better investing is to identify those biases and create rules to minimize their effect.
  5. Investing Basics

    4 Behavioral Biases And How To Avoid Them

    Here are four common common behavioral biases for traders and how to minimize their effects on your portoflio.
  6. Retirement

    This Is Your Brain On Stocks

    Find out how the human mind can hurt investors' portfolios.
  7. Options & Futures

    The Importance Of Trading Psychology And Discipline

    Find out how investing success can be more about your mindset and less about the markets.
  8. Active Trading Fundamentals

    Behavioral Finance

    Learn the science behind irrational decision making and how you can avoid it.
  9. Personal Finance

    Does a Shorter Work Week Lead to Greater Productivity?

    While technology has significantly increased labor productivity, institutional changes, such as a shorter work week, could also be very productive.
  10. Stock Analysis

    Analyzing Porter's 5 Forces on Facebook (FB)

    Read about how you can use Porter's five forces to analyze Facebook's competition. This simple methodology looks at several different factors or forces.
RELATED FAQS
  1. How does the market share of a few companies affect the Herfindahl-Hirschman Index ...

    In economics and commercial law, the Herfindahl-Hirschman Index (HHI) is a widely used measure that indicates the amount ... Read Full Answer >>
  2. How does automated work affect structural unemployment rates?

    One of the main causes of structural unemployment is the automation of work. If jobs become increasingly automated, more ... Read Full Answer >>
  3. What is the difference between economies of scope and economies of scale?

    Economies of scope and economies of scale are two different economic concepts used to help cut a company's cost. Economies ... Read Full Answer >>
  4. How is productivity calculated?

    Productivity measures the efficiency of a company's production process. It is calculated by dividing the outputs produced ... Read Full Answer >>
  5. What is the role of agency theory in corporate governance?

    Agency theory is used to understand the relationships between agents and principals. The agent represents the principal in ... Read Full Answer >>
  6. What's the difference between agency theory and stakeholder theory?

    Agency theory and stakeholder theory are both used to understand and explain various types of relationships in business. ... Read Full Answer >>
Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  3. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  4. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  5. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
Trading Center